Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36181

CareTrust REIT, Inc.

(Exact name of registrant as specified in its charter)


Maryland						46-3999490
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

905 Calle Amanecer, Suite 300, San Clemente, CA						92673
(Address of principal executive offices)						(Zip Code)

(949) 542-3130

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	CTRE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of August 2, 2023, there were 99,476,284 shares of common stock outstanding.

Table of Contents

INDEX


PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33

Item 5.	Other Information	34
Item 6.	Exhibits	34
	Signatures	35

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CARETRUST REIT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(Unaudited)


	June 30, 2023		December 31, 2022
Assets:
Real estate investments, net	$	1,528,234	$	1,421,410
Other real estate related investments, at fair value (including accrued interest of $1,136 as of June 30, 2023 and $1,320 as of December 31, 2022)	166,822		156,368
Assets held for sale, net	21,554		12,291
Cash and cash equivalents	1,145		13,178

Accounts and other receivables	387		416
Prepaid expenses and other assets, net	14,029		11,690
Deferred financing costs, net	4,781		5,428
Total assets	$	1,736,952	$	1,620,781
Liabilities and Equity:
Senior unsecured notes payable, net	$	395,594	$	395,150
Senior unsecured term loan, net	199,454		199,348
Unsecured revolving credit facility	280,000		125,000
Accounts payable, accrued liabilities and deferred rent liabilities	21,039		24,360
Dividends payable	27,843		27,550
Total liabilities	923,930		771,408
Commitments and contingencies (Note 11)
Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022	—		—
Common stock, $0.01 par value; 500,000,000 shares authorized, 99,124,082 and 99,010,112 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	991		990
Additional paid-in capital	1,245,717		1,245,337
Cumulative distributions in excess of earnings	(433,686)		(396,954)
Total equity	813,022		849,373
Total liabilities and equity	$	1,736,952	$	1,620,781

See accompanying notes to condensed consolidated financial statements.

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CARETRUST REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Revenues:
Rental income	$	47,745	$	46,806	$	93,908	$	92,813


Interest and other income	3,808		747		8,251		1,216
Total revenues	51,553		47,553		102,159		94,029
Expenses:
Depreciation and amortization	12,716		12,559		24,954		26,134
Interest expense	11,040		6,303		20,867		12,045
Property taxes	1,390		1,254		2,270		2,674

Impairment of real estate investments	21,392		1,701		23,278		61,384

Provision for loan losses, net	—		—		—		3,844
Property operating expenses	658		89		1,621		536

General and administrative	4,718		4,978		9,779		10,193
Total expenses	51,914		26,884		82,769		116,810
Other (loss) income:

Gain on sale of real estate, net	2,028		—		1,958		186

Unrealized losses on other real estate related investments, net	(2,151)		—		(2,605)		—
Total other (loss) income	(123)		—		(647)		186
Net (loss) income	$	(484)	$	20,669	$	18,743	$	(22,595)
(Loss) earnings per common share:
Basic	$	(0.01)	$	0.21	$	0.19	$	(0.24)
Diluted	$	(0.01)	$	0.21	$	0.19	$	(0.24)
Weighted-average number of common shares:
Basic	99,117		96,564		99,090		96,487
Diluted	99,117		96,598		99,194		96,487

See accompanying notes to condensed consolidated financial statements.

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CARETRUST REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in thousands, except share and per share amounts)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Cumulative Distributions in Excess of Earnings		Total Equity
	Shares	Amount
Balance at January 1, 2023	99,010,112	$	990	$	1,245,337	$	(396,954)	$	849,373

Vesting of restricted common stock, net of shares withheld for employee taxes	87,978	1		(1,480)		—		(1,479)
Amortization of stock-based compensation	—	—		936		—		936
Common dividends ($0.28 per share)	—	—		—		(27,738)		(27,738)
Net income	—	—		—		19,227		19,227
Balance at March 31, 2023	99,098,090	991		1,244,793		(405,465)		840,319

Vesting of restricted common stock	25,992	—		—		—		—
Amortization of stock-based compensation	—	—		924		—		924
Common dividends ($0.28 per share)	—	—		—		(27,737)		(27,737)
Net loss	—	—		—		(484)		(484)
Balance at June 30, 2023	99,124,082	$	991	$	1,245,717	$	(433,686)	$	813,022

See accompanying notes to condensed consolidated financial statements.

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CARETRUST REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in thousands, except share and per share amounts)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Cumulative Distributions in Excess of Earnings		Total Equity
	Shares	Amount
Balance at January 1, 2022	96,296,673	$	963	$	1,196,839	$	(282,045)	$	915,757

Vesting of restricted common stock, net of shares withheld for employee taxes	190,393	2		(2,774)		—		(2,772)
Amortization of stock-based compensation	—	—		1,521		—		1,521
Common dividends ($0.275 per share)	—	—		—		(26,659)		(26,659)
Net loss	—	—		—		(43,264)		(43,264)
Balance at March 31, 2022	96,487,066	965		1,195,586		(351,968)		844,583

Vesting of restricted common stock, net of shares withheld for employee taxes	118,046	1		(1,698)		—		(1,697)
Amortization of stock-based compensation	—	—		1,394		—		1,394
Common dividends ($0.275 per share)	—	—		—		(26,681)		(26,681)
Net income	—	—		—		20,669		20,669
Balance at June 30, 2022	96,605,112	$	966	$	1,195,282	$	(357,980)	$	838,268

See accompanying notes to condensed consolidated financial statements.

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CARETRUST REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	For the Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net income (loss)	$	18,743	$	(22,595)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization (including below-market ground leases)	24,983		26,167
Amortization of deferred financing costs	1,217		1,040

Unrealized losses on other real estate related investments, net	2,605		—
Amortization of stock-based compensation	1,860		2,915
Straight-line rental income	14		(11)
Adjustment for collectibility of rental income	—		977
Noncash interest income	184		(13)
Gain on sale of real estate, net	(1,958)		(186)


Impairment of real estate investments	23,278		61,384
Provision for loan losses, net	—		3,844
Change in operating assets and liabilities:
Accounts and other receivables	14		578
Prepaid expenses and other assets, net	(330)		(1,724)
Accounts payable, accrued liabilities and deferred rent liabilities	(3,624)		(4,074)
Net cash provided by operating activities	66,986		68,302
Cash flows from investing activities:
Acquisitions of real estate, net of deposits applied	(172,453)		(21,915)
Purchases of equipment, furniture and fixtures and improvements to real estate	(6,380)		(3,628)


Investment in real estate related investments and other loans receivable	(27,262)		(102,086)
Principal payments received on real estate related investments and other loans receivable	15,287		1,026

Escrow deposits for potential acquisitions of real estate	(300)		—
Net proceeds from sales of real estate	14,464		959
Net cash used in investing activities	(176,644)		(125,644)
Cash flows from financing activities:
Proceeds from (costs paid for) the issuance of common stock, net	(629)		—


Borrowings under unsecured revolving credit facility	155,000		125,000






Payments of deferred financing costs	(21)		—
Net-settle adjustment on restricted stock	(1,479)		(4,469)
Dividends paid on common stock	(55,246)		(52,817)
Net cash provided by financing activities	97,625		67,714
Net (decrease) increase in cash and cash equivalents	(12,033)		10,372
Cash and cash equivalents as of the beginning of period	13,178		19,895
Cash and cash equivalents as of the end of period	$	1,145	$	30,267
Supplemental disclosures of cash flow information:
Interest paid	$	21,000	$	10,987
Supplemental schedule of noncash investing and financing activities:
Increase in dividends payable	$	294	$	522
Right-of-use asset obtained in exchange for new operating lease obligation	$	369	$	—


Transfer of pre-acquisition costs to acquired assets	$	—	$	7




Sale of real estate settled with notes receivable	$	2,000	$	—

See accompanying notes to condensed consolidated financial statements.

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CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

(Unaudited)

1. ORGANIZATION

Description of Business—CareTrust REIT, Inc.’s (“CareTrust REIT” or the “Company”) primary business consists of acquiring, financing, developing and owning real property to be leased to third-party tenants in the healthcare sector. As of June 30, 2023, the Company owned and leased to independent operators, 224 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 23,694 operational beds and units located in 28 states with the highest concentration of properties by rental income located in California, Texas, Louisiana, Idaho and Arizona. As of June 30, 2023, the Company also had other real estate related investments consisting of five real estate secured loans receivable and one mezzanine loan receivable with a carrying value of $166.8 million.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation—The accompanying condensed consolidated financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all of the disclosures required by GAAP for a complete set of annual audited financial statements. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. In the opinion of management, all adjustments which are of a normal and recurring nature and considered necessary for a fair presentation of the results of the interim periods presented have been included. The results of operations for the interim periods are not necessarily indicative of results for the full year. All intercompany transactions and account balances within the Company have been eliminated.

3. REAL ESTATE INVESTMENTS, NET

The following table summarizes the Company’s investment in owned properties held for use at June 30, 2023 and December 31, 2022 (dollars in thousands):


	June 30, 2023		December 31, 2022
Land	$	266,010	$	238,738
Buildings and improvements	1,575,661		1,483,133
Integral equipment, furniture and fixtures	97,755		97,199
Identified intangible assets	2,832		2,832

Real estate investments	1,942,258		1,821,902
Accumulated depreciation and amortization	(414,024)		(400,492)

Real estate investments, net	$	1,528,234	$	1,421,410

As of June 30, 2023, 222 of the Company’s 224 facilities were leased to various operators under triple-net leases. All of these leases contain annual escalators based on the percentage change in the Consumer Price Index (“CPI”) (but not less than zero), some of which are subject to a cap, or fixed rent escalators. Two of the Company’s 224 facilities are non-operational and are leased under a short term lease with an expected remaining term of less than one year as of June 30, 2023. As of June 30, 2023, 15 facilities were held for sale. See Note 4, Impairment of Real Estate Investments, Assets Held for Sale, Net and Asset Sales, for additional information.

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CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

(Unaudited)

As of June 30, 2023, the Company’s total future contractual minimum rental income for all of its tenants, excluding operating expense reimbursements and assets held for sale, was as follows (dollars in thousands):


Year	Amount
2023 (six months)	$	98,155
2024	197,155
2025	198,310
2026	198,853
2027	195,687
2028	193,433
Thereafter	941,966
Total	$	2,023,559

Tenant Purchase Options

Certain of the Company’s operators hold purchase options allowing them to acquire properties they currently lease from the Company. A summary of these purchase options is presented below (dollars in thousands):

Asset Type(1)

Properties

Lease Expiration

Option Period Open Date(2)

Option Type(3)

Current Cash Rent(4)

SNF

March 2029

4/1/2022

(5)

A / B(7)

832

SNF / Campus

(8)

October 2032

1/1/2024

(6)

1,097

SNF

November 2034

12/1/2024

(5)

3,891

(1) Excludes a purchase option on an 11 building SNF portfolio classified as held for sale as of June 30, 2023 and representing $5.1 million of current cash rent. Tenant is currently not eligible to elect the option.

(2) The Company has not received notice of exercise for the option periods that are currently open.

(3) Option type includes:

A - Fixed base price.

B - Fixed capitalization rate on lease revenue.

(4) Based on annualized cash revenue for contracts in place as of June 30, 2023.

(5) Option window is open until the expiration of the lease term.

(6) Option window is open for six months from the option period open date.

(7) Purchase option reflects two option types.

(8) Includes one property classified as held for sale as of June 30, 2023.

Rental Income

The following table summarizes components of the Company’s rental income (dollars in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Rental Income	2023		2022		2023		2022
Contractual rent due(1)	$	47,752	$	46,801	$	93,922	$	93,779
Straight-line rent	(7)		5		(14)		11
Adjustment for collectibility(2)	—		—		—		(977)


Total	$	47,745	$	46,806	$	93,908	$	92,813

(1) Includes initial cash rent and tenant operating expense reimbursements, as adjusted for applicable rental escalators and rent increases due to capital expenditures funded by the Company. For tenants on a cash basis, this represents the lesser of the amount that would be recognized on a straight-line basis or cash that has been received. Tenant operating expense reimbursements for the three months ended June 30, 2023 and 2022 were $1.2 million and $0.7 million, respectively. Tenant operating expense reimbursements for the six months ended June 30, 2023 and 2022 were $1.9 million and $1.3 million, respectively.

(2) During the six months ended June 30, 2022, and in accordance with Accounting Standards Codification 842, the Company evaluated the collectibility of lease payments through maturity and determined that it was not probable that the Company would collect substantially all of the contractual obligations from four existing and former operators. As such, the Company reversed $0.7 million of operating expense reimbursements, $0.2 million of contractual rent and $0.1 million of straight-line rent during the six months ended June 30, 2022. If lease payments are subsequently deemed probable of collection, the Company will reestablish the receivable which will result in an increase in rental income for such recoveries.

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CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

(Unaudited)

Recent Real Estate Acquisitions

The following table summarizes the Company’s acquisitions for the six months ended June 30, 2023 (dollars in thousands):


Type of Property	Purchase Price(1)		Initial Annual Cash Rent(2)		Number of Properties	Number of Beds/Units(3)
Skilled nursing	$	107,858	$	9,085	7	871
Multi-service campuses	25,276		1,916		1	168
Assisted living	39,319		3,495		4	241
Total	$	172,453	$	14,496	12	1,280

(1) Purchase price includes capitalized acquisition costs.

(2) Initial annual cash rent represents initial cash rent for the first twelve months excluding the impact of rent abatement in the first one to three months, if applicable.

(3) The number of beds/units includes operating beds at the acquisition date.

Lease Amendments

Amended Premier Lease. Effective January 1, 2023, the Company amended its master lease with affiliates of Premier Senior Living, LLC (“Premier”). In connection with the lease amendment, the Company reduced the annual cash rent by $1.7 million, to approximately $2.6 million. The Premier lease, as amended, had a remaining term at the date of amendment of approximately 8 years with two five-year renewal options and CPI-based rent escalators.

Noble VA Lease Termination and New Pennant Lease. Effective March 16, 2023, two ALFs in Wisconsin were removed from a master lease with affiliates of Noble VA Holdings (“Noble VA”) and the Company terminated the applicable Noble VA master lease. Annual cash rent under the applicable Noble VA master lease prior to lease termination was approximately $2.3 million. In connection with the lease termination, the Company entered into a new lease with The Pennant Group, Inc. (“Pennant”) with respect to the two ALFs. The applicable Pennant lease had an initial term at the date of the lease of approximately 15 years with two five-year renewal options and CPI-based rent escalators. Annual cash rent under the new lease was approximately $0.8 million and the master lease provides Pennant with three months deferred rent to be repaid before the expiration or termination of the lease.

Amended Hillstone Lease. On March 24, 2023, the Company amended its master lease with affiliates of Hillstone Healthcare, Inc. (“Hillstone”). In connection with the lease amendment, the Company agreed to defer rent of approximately $0.7 million for 12 months from December 2022 through November 2023 to be repaid as a percentage of adjusted gross revenues of one underlying facility, as defined in the amended lease, beginning January 1, 2025, until deferred rent has been paid in full. The amended Hillstone lease had a remaining term at the date of amendment of approximately 7 years with two five-year renewal options and 2% fixed rent escalators.

Amended Momentum Lease. On April 1, 2023, the Company acquired one SNF. In connection with the acquisition, the Company amended its existing triple-net master lease with affiliates of Momentum Skilled Services (“Momentum”) to include the one SNF and extended the initial lease term. The Momentum master lease, as amended, had a remaining term at the date of amendment of approximately 15 years, with two five-year renewal options and CPI-based rent escalators. Annual rent under the amended lease increased by approximately $1.0 million.

4. IMPAIRMENT OF REAL ESTATE INVESTMENTS, ASSETS HELD FOR SALE, NET AND ASSET SALES

During the three and six months ended June 30, 2023, the Company recognized an impairment charge on 12 and 15 facilities of $21.4 million and $23.3 million, respectively, which is reported in impairment of real estate investments in the condensed consolidated statements of operations. As of June 30, 2023, there were 15 facilities classified as held for sale, all of which have been marked down to fair value and considered Level 3 measurements within the fair value hierarchy. During the three and six months ended June 30, 2022, the Company recognized an impairment charge on one and 21 facilities of $1.7 million and $61.4 million, respectively.

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CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

(Unaudited)

The fair value of the assets held for sale was based on estimated sales prices, which are considered to be Level 3 measurements within the fair value hierarchy. Estimated sales prices were determined using a market approach (comparable sales model), which relies on certain assumptions by management, including: (i) comparable market transactions, (ii) estimated prices per unit, and (iii) binding agreements for sales and non-binding offers to purchase from unrelated third-parties. There are inherent uncertainties in making these assumptions. For the Company’s impairment calculations, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $18,000 to $35,000, with a weighted average price per unit of $21,000.

Asset Sales and Held for Sale Reclassifications

The following table summarizes the Company’s dispositions for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Number of facilities	3		—		4		1
Net sales proceeds(1)	$	13,234	$	—	$	16,464	$	959
Net carrying value	11,206		—		14,506		773
Net gain on sale	$	2,028	$	—	$	1,958	$	186

(1) Net sales proceeds includes $2 million of seller financing in connection with the sale of one ALF in June 2023. The $2.0 million mortgage loan is included in other real estate related investments on the Company’s condensed consolidated balance sheets.

The following table summarizes the Company’s assets held for sale activity for the periods presented (dollars in thousands):


	Net Carrying Value		Number of Facilities
December 31, 2022	$	12,291	5
Additions to assets held for sale	47,047		14
Assets sold	(14,506)		(4)
Impairment of real estate held for sale	(23,278)		—

June 30, 2023	$	21,554	15

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CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

(Unaudited)

5. OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS

As of June 30, 2023 and December 31, 2022, the Company’s other real estate related investments, at fair value, consisted of the following (dollar amounts in thousands):


								As of June 30, 2023
Investment	Facility Count and Type	Principal Balance as of June 30, 2023		Book Value as of June 30, 2023		Book Value as of December 31, 2022		Weighted Average Contractual Interest Rate			Maturity Date
Senior mortgage secured loan receivable	18 SNF/Campus	$	75,000	$	71,488	$	72,543	8.4	%	(1)	6/30/2027
Mortgage secured loan receivable	5 SNF	22,250		21,208		21,345		10.6	%	(2)	8/1/2025
Mortgage secured loan receivable	4 SNF	24,900		23,503		23,796		9.0	%	(2)	9/8/2025
Mortgage secured loan receivable(3)	1 ALF	2,000		2,000		—		9.0	%		5/31/2024
Mortgage secured loan receivable(4)	2 SNF Campus / ILF	25,993		25,993		—		9.0	%		6/29/2033
Mezzanine loan receivable(5)	9 SNF	—		—		14,672		—			—
Mezzanine loan receivable	18 SNF/Campus	25,000		22,630		24,012		11.0	%		6/30/2032
		$	175,143	$	166,822	$	156,368

(1) Rate is net of subservicing fee.

(2) Term secured overnight financing rate (“SOFR”) used as of June 30, 2023 was 5.11%. Rates are net of subservicing fees.

(3) In June 2023, the Company closed on the sale of one ALF. In connection with the sale, the Company provided affiliates of the purchaser of the properties with a $2.0 million mortgage loan. The mortgage loan is secured by the ALF. The mortgage loan has a one-year extension option and may be prepaid in whole before the maturity date.

(4) In June 2023, the Company extended a $26.0 million mortgage loan to a skilled nursing real estate owner. The mortgage loan is secured by one SNF campus and one ILF. The mortgage loan is set to mature on June 29, 2033 and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee ranging from 0% to 3% of the loan plus unpaid interest payments.

(5) Mezzanine loan was prepaid during the six months ended June 30, 2023.

The following table summarizes the Company’s other real estate related investments activity for the six months ended June 30, 2023 and 2022 (dollars in thousands):


	Six Months Ended June 30,
	2023		2022
Origination of other real estate related investments	$	28,243	$	100,000
Accrued interest, net	(184)		13
Unrealized losses on other real estate related investments, net	(2,605)		—
Repayments of other real estate related investments	(15,000)		—
Net increase in other real estate related investments, at fair value	$	10,454	$	100,013

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CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

(Unaudited)

As of June 30, 2023 and December 31, 2022, the Company’s other loans receivable, included in prepaid expenses and other assets, net on the Company’s condensed consolidated balance sheets, consisted of the following (dollars in thousands):


							As of June 30, 2023
Investment	Principal Balance as of June 30, 2023		Book Value as of June 30, 2023		Book Value as of December 31, 2022		Weighted Average Contractual Interest Rate		Maturity Date
Other loans receivable	$	10,328	$	10,333	$	9,600	8.5	%	8/31/2023 - 9/30/2025
Expected credit loss	—		(2,094)		(2,094)
Total	$	10,328	$	8,239	$	7,506

The following table summarizes the Company’s other loans receivable activity for the six months ended June 30, 2023 and 2022 (dollars in thousands):


	Six Months Ended June 30,
	2023		2022
Origination of loans receivable	$	1,019	$	2,500
Principal payments	(287)		(276)
Accrued interest, net	1		(2)
Provision for loan losses, net	—		(4,594)

Net increase (decrease) in other loans receivable	$	733	$	(2,372)

Expected credit losses and recoveries are recorded in provision for loan losses, net in the condensed consolidated statements of operations. During the six months ended June 30, 2022, the Company recorded a $4.6 million expected credit loss related to two other loans receivable that have been placed on non-accrual status, including an unfunded loan commitment of $0.4 million, net of a loan loss recovery of $0.8 million related to a loan previously written-off. During the six months ended June 30, 2023, the Company had no additional expected credit loss and did not consider any loan receivable investments to be impaired.

The following table summarizes the interest and other income recognized from the Company’s loans receivable and other investments during the three and six months ended June 30, 2023 and 2022 (dollars in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Investment	2023		2022		2023		2022
Mortgage secured loans receivable	$	2,762	$	17	$	5,466	$	17
Mezzanine loans receivable	695		713		2,278		1,163


Other	351		17		507		36
Total	$	3,808	$	747	$	8,251	$	1,216

6. FAIR VALUE MEASUREMENTS

The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. GAAP guidance defines three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

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(Unaudited)

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3 – Unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and, depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. Changes in the type of inputs may result in a reclassification for certain assets. The Company does not expect that changes in classifications between levels will be frequent.

Items Measured at Fair Value on a Recurring Basis

The following table presents information about the Company’s assets measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, aggregated by the level in the fair value hierarchy within which those instruments fall (dollars in thousands):


	Level 1		Level 2		Level 3		Balance as of June 30, 2023
Assets:
Mortgage secured loans receivable	$	—	$	—	$	144,192	$	144,192
Mezzanine loans receivable	—		—		22,630		22,630
Total	$	—	$	—	$	166,822	$	166,822


	Level 1		Level 2		Level 3		Balance as of December 31, 2022
Assets:
Mortgage secured loans receivable	$	—	$	—	$	117,684	$	117,684
Mezzanine loans receivable	—		—		38,684		38,684
Total	$	—	$	—	$	156,368	$	156,368

The following table details the Company’s assets measured at fair value on a recurring basis using Level 3 inputs (dollars in thousands):


	Investments in Real Estate Secured Loans		Investments in Mezzanine Loans
Balance at December 31, 2022	$	117,684	$	38,684
Loan originations	28,243		—
Accrued interest, net	(21)		(163)
Unrealized losses on other real estate related investments, net	(1,714)		(891)
Repayments	—		(15,000)
Balance as of June 30, 2023	$	144,192	$	22,630

Real estate secured and mezzanine loans receivable: The fair value of the secured and mezzanine loans receivables were estimated using an internal valuation model that considered the expected future cash flows of the investment, the underlying collateral value, market interest rates and other credit enhancements. As such, the Company classifies each instrument as Level 3 due to the significant unobservable inputs used in determining market interest rates for investments with similar terms. During the three months ended June 30, 2023, the Company recorded an unrealized loss of $1.9 million related to three mortgage loans and one mezzanine loan receivable due to rising interest rates and a $0.3 million loss due to a loan origination fee paid. During the six months ended June 30, 2023, the Company recorded an unrealized loss of $2.8 million related to three mortgage loans and one mezzanine loan receivable due to rising interest rates, partially offset by a reversal of a previously recognized unrealized loss of $0.5 million related to the repayment of one mezzanine loan receivable. Future changes in market interest rates or collateral value could materially impact the estimated discounted cash flows that are used to

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

(Unaudited)

determine the fair value of the secured and mezzanine loans receivable. As of June 30, 2023 and December 31, 2022, the Company did not have any loans that were 90 days or more past due.

The following table shows the quantitative information about unobservable inputs related to the Level 3 fair value measurements comprising the investments in secured and mezzanine loans receivables as of June 30, 2023:

Type

Book Value as of June 30, 2023

Valuation Technique

Unobservable Inputs

Range

Mortgage secured loans receivable

144,192

Discounted cash flow

Discount Rate

10% - 14%

Mezzanine loan receivable

22,630

Discounted cash flow

Discount Rate

12% - 14%

For the six months ended June 30, 2023, there were no classification changes in assets and liabilities with Level 3 inputs in the fair value hierarchy.

Items Disclosed at Fair Value

Considerable judgment is necessary to estimate the fair value disclosure of financial instruments. The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. A summary of the face value, carrying amount and fair value of the Notes (as defined in Note 7, Debt, below) as of June 30, 2023 and December 31, 2022 using Level 2 inputs is as follows (dollars in thousands):


		June 30, 2023						December 31, 2022
	Level	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value



Financial liabilities:
Senior unsecured notes payable	2	$	400,000	$	395,594	$	346,588	$	400,000	$	395,150	$	345,036

Cash and cash equivalents, accounts and other receivables, accounts payable, and accrued liabilities: The carrying values for these instruments approximate their fair values due to the short-term nature of these instruments.

Senior unsecured notes payable: The fair value of the Notes was determined using third-party quotes derived from orderly trades.

Unsecured revolving credit facility and senior unsecured term loan: The fair values approximate their carrying values as the interest rates are variable and approximate prevailing market interest rates for similar debt arrangements.

7. DEBT

The following table summarizes the balance of the Company’s indebtedness as of June 30, 2023 and December 31, 2022 (dollars in thousands):


	June 30, 2023						December 31, 2022
	Principal Amount		Deferred Loan Fees		Carrying Value		Principal Amount		Deferred Loan Fees		Carrying Value
Senior unsecured notes payable	$	400,000	$	(4,406)	$	395,594	$	400,000	$	(4,850)	$	395,150
Senior unsecured term loan	200,000		(546)		199,454		200,000		(652)		199,348
Unsecured revolving credit facility	280,000		—		280,000		125,000		—		125,000
	$	880,000	$	(4,952)	$	875,048	$	725,000	$	(5,502)	$	719,498

Senior Unsecured Notes Payable

2028 Senior Notes. On June 17, 2021, the Company’s wholly owned subsidiary, CTR Partnership, L.P. (the “Operating Partnership”), and its wholly owned subsidiary, CareTrust Capital Corp. (together with the Operating Partnership, the “Issuers”), completed a private offering of $400.0 million aggregate principal amount of 3.875% Senior Notes due 2028 (the “Notes”) to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act of 1933, as amended. The Notes were issued at

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(Unaudited)

par, resulting in gross proceeds of $400.0 million and net proceeds of approximately $393.8 million after deducting underwriting fees and other offering expenses. The Notes mature on June 30, 2028. The Notes accrue interest at a rate of 3.875% per annum payable semiannually in arrears on June 30 and December 30 of each year, commencing on December 30, 2021.

The Issuers may redeem some or all of the Notes at any time prior to March 30, 2028 at a price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest on the Notes, if any, to, but not including, the redemption date, plus a “make-whole” premium. At any time on or after March 30, 2028, the Issuers may redeem some or all of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed plus accrued interest on the Notes, if any, to, but not including, the redemption date. In addition, at any time on or prior to June 30, 2024, up to 40% of the aggregate principal amount of the Notes may be redeemed with the net proceeds of certain equity offerings at a redemption price of 103.875% of the aggregate principal amount of Notes to be redeemed plus accrued and unpaid interest on the Notes, if any, to, but not including, the redemption date. If certain changes of control of the Company occur, the Issuers will be required to make an offer to holders of the Notes to repurchase their Notes at a price of 101% of their principal amount plus accrued and unpaid interest, if any, to, but not including, the repurchase date.

The obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by the Company and all of CareTrust’s existing and future subsidiaries (other than the Issuers) that guarantee obligations under the Amended Credit Facility (as defined below); provided, however, that such guarantees are subject to automatic release under certain customary circumstances.

The indenture governing the Notes contains customary covenants such as limiting the ability of the Company and its restricted subsidiaries to: incur or guarantee additional indebtedness; incur or guarantee secured indebtedness; pay dividends or distributions on, or redeem or repurchase, capital stock; make certain investments or other restricted payments; sell assets; enter into transactions with affiliates; merge or consolidate or sell all or substantially all of their assets; and create restrictions on the ability of the Issuers and their restricted subsidiaries to pay dividends or other amounts to the Issuers. The indenture governing the Notes also requires the Company and its restricted subsidiaries to maintain a specified ratio of unencumbered assets to unsecured indebtedness. These covenants are subject to a number of important and significant limitations, qualifications and exceptions. The indenture governing the Notes also contains customary events of default.

As of June 30, 2023, the Company was in compliance with all applicable financial covenants under the indenture governing the Notes.

Unsecured Revolving Credit Facility and Term Loan

On December 16, 2022, the Operating Partnership, as the borrower, the Company, as guarantor, CareTrust GP, LLC, and certain of the Operating Partnership’s wholly owned subsidiaries, entered into a second amended and restated credit and guaranty agreement with KeyBank National Association, as administrative agent, an issuing bank and swingline lender (the “Second Amended Credit Agreement”). The Second Amended Credit Agreement, which amends and restates the Company’s amended and restated credit and guaranty agreement, dated as of February 8, 2019 (as amended, the “Prior Credit Agreement”) provides for: (i) an unsecured revolving credit facility (the “Revolving Facility”) with revolving commitments in an aggregate principal amount of $600.0 million, including a letter of credit subfacility for 10% of the then available revolving commitments and a swingline loan subfacility for 10% of the then available revolving commitments and (ii) the continuation of the unsecured term loan credit facility which was previously extended under the Prior Credit Agreement (the “Term Loan” and together with the Revolving Facility, the “Second Amended Credit Facility”) in an aggregate principal amount of $200.0 million. Future borrowings under the Second Amended Credit Facility will be used for working capital purposes, for capital expenditures, to fund acquisitions and for general corporate purposes.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

(Unaudited)

subsidiaries (subject to decrease at the Operating Partnership’s election if the Company obtains certain specified investment grade ratings on its senior long-term unsecured debt). In addition, the Operating Partnership will pay a facility fee on the revolving commitments under the Revolving Facility ranging from 0.15% to 0.35% per annum, based on the debt to asset value ratio of the Company and its consolidated subsidiaries (unless the Company obtains certain specified investment grade ratings on its senior long-term unsecured debt and the Operating Partnership elects to decrease the applicable margin as described above, in which case the Operating Partnership will pay a facility fee on the revolving commitments ranging from 0.125% to 0.30% per annum based on the credit ratings of the Company’s senior long-term unsecured debt). As of June 30, 2023, the Operating Partnership had $200.0 million of borrowings outstanding under the Term Loan and $280.0 million outstanding under the Revolving Facility.

The Revolving Facility has a maturity date of February 9, 2027, and includes, at the sole discretion of the Operating Partnership, two six-month extension options. The Term Loan has a maturity date of February 8, 2026.

The Second Amended Credit Facility is guaranteed, jointly and severally, by the Company and its wholly owned subsidiaries that are party to the Second Amended Credit Agreement (other than the Operating Partnership). The Second Amended Credit Agreement contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and its subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations, amend organizational documents and pay certain dividends and other restricted payments. The Second Amended Credit Agreement requires the Company to comply with financial maintenance covenants to be tested quarterly, consisting of a maximum debt to asset value ratio, a minimum fixed charge coverage ratio, a minimum tangible net worth, a maximum cash distributions to operating income ratio, a maximum secured debt to asset value ratio, a maximum secured recourse debt to asset value ratio, a maximum unsecured debt to unencumbered properties asset value ratio, a minimum unsecured interest coverage ratio and a minimum rent coverage ratio. The Second Amended Credit Agreement also contains certain customary events of default, including the failure to make timely payments under the Second Amended Credit Facility or other material indebtedness, the failure to satisfy certain covenants (including the financial maintenance covenants), the occurrence of change of control and specified events of bankruptcy and insolvency.

As of June 30, 2023, the Company was in compliance with all applicable financial covenants under the Second Amended Credit Agreement.

8. EQUITY

Common Stock

At-The-Market Offering—On February 24, 2023, the Company entered into a new equity distribution agreement to issue and sell, from time to time, up to $500.0 million in aggregate offering price of its common stock through an “at-the-market” equity offering program (the “ATM Program”). In addition to the issuance and sale of shares of its common stock, the Company may also enter into one or more forward sales agreements (each, an “ATM forward contract”) with sales agents for the sale of the Company’s shares of common stock under the ATM Program.

The Company expects to fully physically settle forward equity sales by delivery of shares of common stock to the forward purchaser and receive cash proceeds upon one or more settlement dates, which are typically a one-year term, at the Company’s discretion, prior to the final settlement date, at which time the Company expects to receive aggregate net cash proceeds at settlement equal to the number of shares sold on a forward basis multiplied by the relevant forward price per share. The weighted average forward sale price that the Company expects to receive upon physical settlement will be subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchaser’s stock borrowing costs and (iii) scheduled dividends through the settlement. During the three and six months ended June 30, 2023, the Company executed forward equity sales under the ATM Program with a financial institution acting as a forward purchaser to sell 6,736,089 shares of common stock at a weighted average sales price of $19.71 per share before commissions and offering expenses. The Company did not receive any proceeds from the sales of its shares of common stock by the forward sellers. As of June 30, 2023, the Company has not settled any portion of these forward equity sales.

There was no ATM Program activity (or activity under any predecessor at-the-market equity offering programs) for the three and six months ended June 30, 2022.

As of June 30, 2023, the Company had $367.2 million available for future issuances under the ATM Program.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

(Unaudited)

Dividends on Common Stock—The following table summarizes the cash dividends per share of common stock declared by the Company’s board of directors for the first six months of 2023 (dollars in thousands, except per share amounts):


	For the Three Months Ended
	March 31, 2023		June 30, 2023
Dividends declared per share	$	0.28	$	0.28
Dividends payment date	April 14, 2023		July 14, 2023
Dividends payable as of record date(1)	$	27,846	$	27,853
Dividends record date	March 31, 2023		June 30, 2023

(1) Dividends payable includes dividends on performance stock awards that will be paid if and when the shares subject to such awards vest if deemed probable of meeting their performance condition.

9. STOCK-BASED COMPENSATION

All stock-based awards are subject to the terms of the CareTrust REIT, Inc. and CTR Partnership, L.P. Incentive Award Plan (the “Plan”). The Plan provides for the granting of stock-based compensation, including stock options, restricted stock, performance awards, restricted stock units, relative total stockholder return based stock awards and other incentive awards to officers, employees and directors in connection with their employment with or services provided to the Company. Under the Plan, 5,000,000 shares have been authorized for awards.

Under the Plan, restricted stock awards (“RSAs”) vest in equal annual installments over a three year period for the RSAs granted in 2022 and 2021 and a four year period for the RSAs granted in 2020. RSAs granted to non-employee members of the board of directors (“Board Awards”) vest in full on the earlier to occur of the Company’s next Annual Meeting of Stockholders or one year. Performance stock awards (“PSA”) granted are subject to both time and performance based conditions and vest over a one-to-three year period for PSAs granted in 2021 and over a one-to-four year period for PSAs granted in 2020. The amount of such PSAs that will ultimately vest is dependent on the Company’s Normalized Funds from Operations (“NFFO”) per share, as defined by the Compensation Committee, meeting or exceeding a specified per share amount for the applicable vesting period. Relative total shareholder return units (“TSR Units”) granted in 2022 and 2021 are subject to both time and market based conditions and cliff vest after a three-year period. The amount of such market awards that will ultimately vest is dependent on the Company’s total shareholder return (“TSR”) performance relative to a custom TSR peer group consisting of other publicly traded healthcare REITs and will range from 0% to 200% of the TSR Units initially granted. The RSAs, PSAs, and Board Awards are valued on the date of grant based on the closing price of the Company’s common stock, while the TSR Units are valued on the date of grant using a Monte Carlo valuation model. The vesting of certain awards may accelerate, as defined in the grant agreement, upon retirement, a change in control or other events.

The following table summarizes the status of the restricted stock award and performance award activity for the six months ended June 30, 2023:


	Shares	Weighted Average Share Price
Unvested balance at December 31, 2022	573,609	$	20.63
Granted:


Board Awards	24,768	19.38
Vested	(185,767)	20.94
Forfeited	(61,680)	21.19
Unvested balance at June 30, 2023	350,930	$	20.28

As of June 30, 2023, the weighted-average remaining vesting period of such awards was 1.7 years.

The following table summarizes the stock-based compensation expense recognized for the periods presented (dollars in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Stock-based compensation expense	$	924	$	1,394	$	1,860	$	2,915

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CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

(Unaudited)

For the three and six months ended June 30, 2023, approximately $0.6 million of previously recognized stock-based compensation expense related to the PSAs was reversed as the awards are not expected to meet the performance conditions. For the six months ended June 30, 2023, approximately $0.9 million of previously recognized stock-based compensation expense was reversed due to forfeitures of stock awards.

As of June 30, 2023, there was $7.2 million of unamortized stock-based compensation expense related to the unvested RSAs and TSR Awards.

10. (LOSS) EARNINGS PER COMMON SHARE

The following table presents the calculation of basic and diluted (loss) earnings per common share (“EPS”) for the Company’s common stock for the three and six months ended June 30, 2023 and 2022, and reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS (amounts in thousands, except per share amounts):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net (loss) income	$	(484)	$	20,669	$	18,743	$	(22,595)
Less: Net income allocated to participating securities	(89)		(94)		(178)		(211)
Numerator for basic and diluted earnings available to common stockholders	$	(573)	$	20,575	$	18,565	$	(22,806)
Denominator:
Weighted-average basic common shares outstanding	99,117		96,564		99,090		96,487
Dilutive potential common shares - performance stock awards	—		34		90		—
Dilutive potential common shares - forward equity agreements	—		—		14		—
Weighted-average diluted common shares outstanding	99,117		96,598		99,194		96,487

(Loss) earnings per common share, basic	$	(0.01)	$	0.21	$	0.19	$	(0.24)
(Loss) earnings per common share, diluted	$	(0.01)	$	0.21	$	0.19	$	(0.24)
Antidilutive unvested restricted stock awards, total shareholder return units, performance awards, and forward equity shares excluded from the computation	500		341		316		431

11. COMMITMENTS AND CONTINGENCIES

The Company and its subsidiaries are and may become from time to time a party to various claims and lawsuits arising in the ordinary course of business, which are not individually or in the aggregate anticipated to have a material adverse effect on the Company’s results of operations, financial condition or cash flows. Claims and lawsuits may include matters involving general or professional liability asserted against the Company’s tenants, which are the responsibility of the Company’s tenants and for which the Company is entitled to be indemnified by its tenants under the insurance and indemnification provisions in the applicable leases.

Capital expenditures for each property leased under the Company’s triple-net leases are generally the responsibility of the tenant, except that, for the facilities leased to subsidiaries of The Ensign Group, Inc., under multiple long-term leases, and Pennant, the tenant will have an option to require the Company to finance certain capital expenditures up to an aggregate of 20% of the Company’s initial investment in such property, subject to a corresponding rent increase at the time of funding. For the Company’s other triple-net master leases, the tenants also have the option to request capital expenditure funding that would generally be subject to a corresponding rent increase at the time of funding, which are subject to tenant compliance with the conditions to the Company’s approval and funding of their requests. As of June 30, 2023, the Company had committed to fund

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(Unaudited)

expansions, construction and capital improvements at certain triple-net leased facilities totaling $14.2 million, of which $2.7 million is subject to rent increase at the time of funding.

12. CONCENTRATION OF RISK

Concentrations of credit risk arise when one or more tenants, operators, or obligors related to the Company’s investments are engaged in similar business activities or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions.

Major operator concentration - The Company has operators from which it derived 10% or more of its rental revenue for the three and six months ended June 30, 2023 and 2022. The following table sets forth information regarding the Company’s major operators as of June 30, 2023 and 2022:


	Number of Facilities			Number of Beds/Units			Percentage of Total Revenue(1)
Operator	SNF	Campus	ALF/ILF	SNF	Campus	ALF/ILF	Three Months Ended		Six Months Ended
June 30, 2023
Ensign(2)	83	8	7	8,741	997	661	36	%	36	%
Priority Management Group	13	2	—	1,742	402	—	16	%	16	%

June 30, 2022
Ensign(2)	83	8	7	8,756	997	678	35	%	35	%
Priority Management Group	13	2	—	1,742	402	—	16	%	16	%

(1) The Company’s rental income, exclusive of operating expense reimbursements and adjustments for collectibility.

(2) Ensign is subject to the registration and reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. Ensign’s financial statements, as filed with the SEC, can be found at http://www.sec.gov. The Company has not verified this information through an independent investigation or otherwise.

Major geographic concentration – The following table provides information regarding the Company’s concentrations with respect to certain states, from which the Company derived 10% or more of its rental revenue for the three and six months ended June 30, 2023 and 2022:


	Number of Facilities			Number of Beds/Units			Percentage of Total Revenue(1)
State	SNF	Campus	ALF/ILF	SNF	Campus	ALF/ILF	Three Months Ended		Six Months Ended
June 30, 2023
CA	29	9	5	3,307	1,527	437	28	%	28	%
TX	40	3	2	5,126	536	212	23	%	23	%

June 30, 2022
CA	27	8	5	3,048	1,359	449	27	%	26	%
TX	38	3	3	4,849	536	242	22	%	22	%

(1) Represents the Company’s rental income, exclusive of operating expense reimbursements and adjustments for collectibility.

13. SUBSEQUENT EVENTS

The Company evaluates subsequent events in accordance with ASC 855, Subsequent Events. The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued.

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(Unaudited)

Recent Investments

On July 17, 2023, the Company extended a $15.7 million mortgage secured loan to a skilled nursing real estate owner. The mortgage loan is secured by a two-facility skilled nursing portfolio in Florida, operated by a regional skilled nursing operator. The loan bears interest at 9.0%, payable monthly. The term loan is set to mature on August 1, 2028, with one five-year extension option and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee ranging from 2% to 3% of the loan plus unpaid interest payments; provided, however, that no exit fee is payable in connection with the loan being refinanced pursuant to a loan (or loans) provided by Fannie Mae, Freddie Mac, Federal Housing Administration, or a similar governmental authority. The investment was funded using proceeds from the Revolving Facility as well as cash on hand.

At-The-Market Offering of Common Stock

In July 2023, the Company executed forward equity sales under the ATM Program with a financial institution acting as a forward purchaser to sell 3,839,348 shares of common stock at a weighted average sales price of $19.94 per share before commissions and offering expenses. The Company did not receive any proceeds from the sale of its shares of common stock by the forward sellers.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

Certain statements in this report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding: future financing plans, business strategies, growth prospects and operating and financial performance; expectations regarding the making of distributions and the payment of dividends; and compliance with and changes in governmental regulations.

Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to: (i) the impact of possible additional surges of COVID-19 infections or the risk of other pandemics, epidemics or infectious disease outbreaks, measures taken to prevent the spread of such outbreaks and the related impact on our business or the businesses of our tenants; (ii) the ability and willingness of our tenants to meet and/or perform their obligations under the triple-net leases we have entered into with them, including, without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (iii) the risk that we may have to incur additional impairment charges related to our assets held for sale if we are unable to sell such assets at the prices we expect; (iv) the ability of our tenants to comply with applicable laws, rules and regulations in the operation of the properties we lease to them; (v) the ability and willingness of our tenants to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant, as well as any obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant; (vi) the availability of and the ability to identify (a) tenants who meet our credit and operating standards, and (b) suitable acquisition opportunities, and the ability to acquire and lease the respective properties to such tenants on favorable terms; (vii) the ability to generate sufficient cash flows to service our outstanding indebtedness; (viii) access to debt and equity capital markets; (ix) fluctuating interest rates; (x) the ability to retain our key management personnel; (xi) the ability to maintain our status as a real estate investment trust (“REIT”); (xii) changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs; (xiii) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xiv) any additional factors included under Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and this report, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission (the “SEC”).

Forward-looking statements speak only as of the date of this report. Except in the normal course of our public disclosure obligations, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any statement is based.

Overview

CareTrust REIT is a self-administered, publicly-traded REIT engaged in the ownership, acquisition, financing, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. As of June 30, 2023, we owned and leased to independent operators, 224 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 23,694 operational beds and units located in 28 states with the highest concentration of properties by rental revenues located in California, Texas, Louisiana, Idaho and Arizona. As of June 30, 2023, we also had other real estate related investments consisting of five real estate secured loans receivable and one mezzanine loan receivable with an aggregate carrying value of $166.8 million.

We generate revenues primarily by leasing healthcare-related properties to healthcare operators in triple-net lease arrangements, under which the tenant is solely responsible for the costs related to the property (including property taxes, insurance, maintenance and repair costs and capital expenditures, subject to certain exceptions in the case of properties leased to Ensign and Pennant). From time to time, we also extend secured mortgage loans to healthcare operators, secured by healthcare-related properties, and secured mezzanine loans to healthcare operators, secured by membership interests in healthcare-related properties. We conduct and manage our business as one operating segment for internal reporting and internal decision-making purposes. We expect to grow our portfolio by pursuing opportunities to acquire additional properties that will be leased to a

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diverse group of local, regional and national healthcare providers, which may include new or existing skilled nursing operators, as well as seniors housing operators, behavioral health facilities and related businesses. We also anticipate diversifying our portfolio over time, including by acquiring properties in different geographic markets, and in different asset classes. In addition, we actively monitor the clinical, regulatory and financial operating results of our tenants, and work to identify opportunities within their operations and markets that could improve their operating results at our facilities. We communicate such observations to our tenants; however, we have no contractual obligation to do so. Moreover, our tenants have sole discretion with respect to the day-to-day operation of the facilities they lease from us, and how and whether to implement any observation we may share with them. We also actively monitor the overall occupancy, skilled mix, and other operating metrics of our tenants on at least a monthly basis including, beginning in the quarter ended June 30, 2020, any stimulus funds received by each tenant. We have replaced tenants in the past, and may elect to replace tenants in the future, if they fail to meet the terms and conditions of their leases with us. In addition, we have, and may from time to time in the future, repurpose facilities for other uses, such as behavioral health. The replacement tenants may include tenants with whom we have had no prior landlord-tenant relationship as well as current tenants with whom we are comfortable expanding our relationships. We have also provided select tenants with strategic capital for facility upkeep and modernization, as well as short-term working capital loans when they are awaiting licensure and certification or conducting turnaround work in one or more of our properties, and we may continue to do so in the future. In addition, we periodically reassess the investments we have made and the tenant relationships we have entered into, and have selectively disposed of facilities or investments, or terminated such relationships, and we expect to continue making such reassessments and, where appropriate, taking such actions.

Recent Developments

Post COVID-19 Pandemic Conditions and Outlook

Tenants of our properties operating pursuant to triple-net master leases have been adversely impacted, and we expect that they will continue to be adversely impacted, by adverse conditions that emerged, and have continued, during the COVID-19 pandemic. Our tenants are experiencing increased operating costs as a result of actions they took to prevent or mitigate the outbreak or spread of COVID-19 at their facilities. Our tenants are also experiencing labor shortages resulting in limited admissions, higher operating costs and continued reduced occupancy levels. At a portfolio wide level, occupancy levels at our seniors housing facilities, comprising our ALFs and ILFs, are continuing to show signs of recovery following the onset of the COVID-19 pandemic, although they have not yet fully normalized to pre-pandemic levels. Within our SNFs, occupancy levels have continued to improve since their trough in January 2021, but still remain below pre-COVID occupancy levels for most of our tenants.

Federal and state governmental relief programs enacted during the pandemic provided temporary assistance to many of our tenants during the COVID-19 pandemic. These included the Public Health and Social Services Emergency Fund that began funding in late 2021, a temporary suspension of Medicare sequestration cuts under the Coronavirus Aid, Relief, and Economic Security Act and a temporary 6.2% increase in Federal Medical Assistance Percentage (“FMAP”) that was approved retroactive to January 1, 2020 and will be phased down by December 31, 2023 under the Consolidated Appropriations Act of 2023. The tapering and/or end of these relief programs has impacted, and may continue to adversely impact, the business and financial condition of our tenants, as they continue to experience lower occupancy levels and higher operating costs.

In response to the COVID-19 pandemic, the U.S. Department of Health and Human Services (“HHS”) enacted the COVID-19 Public Health Emergency (“PHE”) that allowed HHS to provide temporary regulatory waivers, including waiver of the three-day hospital stay requirement for a patient’s Medicare benefits to refresh. This waiver had the effect of increasing skilled mix in our SNFs periodically during the COVID-19 pandemic, especially during surges in COVID-19 outbreaks. An increase in skilled mix can, but may not necessarily, offset some or all of the adverse financial impact to the operator of the SNF from occupancy declines. The PHE, including HHS’s waiver of the three-day hospital stay requirement, expired on May 11, 2023. With the expiration of the PHE and the lifting of the three-day hospital stay requirement, our SNFs may experience decreases in occupancy levels or revenues, which may have a further adverse impact on the business and financial condition of the operators of our SNFs.

State specific approaches have been developed including various states having increased their Medicaid base rates or taken other measures to account for the increase in expenses as a result of the COVID-19 pandemic. For example, Texas has increased its Medicaid rate to offset the expiration of the FMAP, which is effective through at least August 2023. There is no assurance that these measures will continue, will be widely available to our tenants or will sufficiently offset the impact that the government relief programs previously provided.

In July 2023, The Centers for Medicare and Medicaid Services approved its payment rate update to SNF reimbursements for fiscal 2024, commencing October 1, 2023, which includes a net increase of 4.0%, or approximately $1.4

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billion, in Medicare Part A payments to SNFs. This increase is expected to partially offset some of our tenants’ higher operating costs.

As a result of impacts experienced by our tenants since the onset of the COVID-19 pandemic, the ability of some of our tenants to continue to meet their financial obligations to us in full has been negatively impacted. See “Impairment of Real Estate Assets, Assets Held for Sale and Asset Sales” below. During the three and six months ended June 30, 2023, we collected 96.7% and 96.4%, respectively, of contractual rents due from our operators excluding cash deposits. In July 2023, we collected 98.0% of contractual rents due from our operators excluding cash deposits. From time to time in the past, we have taken actions to reposition one or more properties with a replacement tenant or sell the property and, in certain cases, we may also determine to restructure tenants’ long-term obligations. In the event our tenants are unable to satisfy their obligations to us and we are unable to effect these actions on terms that are as favorable to us as those currently in place, our rental income could be adversely impacted and we may incur additional expenses or obligations and be required to recognize additional impairment charges.

Impact of Macroeconomic Conditions

The substantial inflationary pressures that our economy continues to face has resulted in many headwinds for us and our tenants, most notably in the form of rising interest rates, volatility in the capital markets, a softening of consumer sentiment and signs of a potential broader economic slowdown. These current macroeconomic conditions, particularly inflation (including rising wages and supply costs), rising interest rates and related changes to consumer spending, including, but not limited to, causing individuals to delay or defer moves to seniors housing, has adversely impacted and could continue to adversely impact our tenants’ ability to meet some of their financial obligations to us. Rising interest rates also increase our costs of capital to finance acquisitions and increase our borrowing costs, and future changes in market interest rates could materially impact the estimated discounted cash flows that are used to determine the fair value of our other real estate related investments. In addition, current macroeconomic conditions and the resulting market volatility may adversely impact our ability to sell properties on acceptable terms, if at all, which could result in additional impairment charges.

For more information regarding the potential impact of COVID-19 and macroeconomic conditions on our business, see “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2022.

Impairment of Real Estate Assets, Assets Held for Sale, and Asset Sales

During the six months ended June 30, 2023, we decided to pursue the sale of a SNF portfolio consisting of 11 properties as well as one additional property and classified these 12 SNFs as held for sale.

During the three and six months ended June 30, 2023, we recognized an impairment charge on 12 and 15 facilities of $21.4 million and $23.3 million, respectively, which is reported in impairment of real estate investments in the condensed consolidated statements of operations. Two of the 15 facilities impaired and classified as held for sale were sold during the three months ended June 30, 2023. The impairment charges were recognized to write down the properties’ aggregate carrying value to their aggregate fair value, less estimated costs to sell.

Asset Sales and Held for Sale Reclassifications

The following table summarizes our dispositions for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Number of facilities	3		—		4		1
Net sales proceeds	$	13,234	$	—	$	16,464	$	959
Net carrying value	11,206		—		14,506		773
Net gain on sale	$	2,028	$	—	$	1,958	$	186

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The following table summarizes our assets held for sale activity for the periods presented (dollars in thousands):


	Net Carrying Value		Number of Facilities
December 31, 2022	$	12,291	5
Additions to assets held for sale	47,047		14
Assets sold	(14,506)		(4)
Impairment of real estate held for sale	(23,278)		—

June 30, 2023	$	21,554	15

Recent Investments

From January 1, 2023 through August 3, 2023, we acquired seven SNFs, one multi-service campus, and four ALFs for approximately $172.5 million, which includes estimated capitalized acquisition costs. These acquisitions are expected to generate initial annual cash revenues of approximately $14.5 million and an initial blended yield of approximately 8.4% before the impact of any rent abatement.

From January 1, 2023 through August 3, 2023, we originated $41.7 million in mortgage loans. These investments are expected to generate annual interest income of approximately $3.8 million and an initial blended yield of approximately 9.0%.

At-The-Market Offering of Common Stock

On February 24, 2023, we entered into a new equity distribution agreement to issue and sell, from time to time, up to $500.0 million in aggregate offering price of our common stock through an “at-the-market” equity offering program (the “ATM Program”). In addition to the issuance and sale of shares of our common stock, we may also enter into one or more forward sales agreements (each, an “ATM forward contract”) with sales agents for the sale of shares of our common stock under the ATM Program.

From January 1, 2023 through August 3, 2023, we executed forward equity sales under the ATM Program with a financial institution acting as a forward purchaser to sell an aggregate of 10,575,437 shares of common stock at a weighted average sales price of $19.80 per share before commissions and offering expenses. We did not receive any proceeds from the sale of our shares of common stock by the forward sellers. We currently expect to fully physically settle forward equity sales by delivery of shares of common stock to the forward purchaser and receive cash proceeds upon one or more settlement dates, which are typically a one-year term, at our discretion, prior to the final settlement date, at which time we expect to receive aggregate net cash proceeds at settlement equal to the number of shares sold on a forward basis multiplied by the relevant forward price per share. The weighted average forward sale price that we expect to receive upon physical settlement will be subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchaser’s stock borrowing costs and (iii) scheduled dividends through the settlement. We have not settled any portion of these forward equity sales as of the date of this report.

There was no ATM Program activity (or activity under any predecessor at-the-market equity offering programs) for the three and six months ended June 30, 2022.

As of August 3, 2023, we had $290.7 million available for future issuances under the ATM Program.

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Results of Operations

Three Months Ended June 30, 2023 Compared to Three Months Ended March 31, 2023:


	Three Months Ended				Increase (Decrease)		Percentage Difference
	June 30, 2023		March 31, 2023
	(dollars in thousands)
Revenues:
Rental income	$	47,745	$	46,163	$	1,582	3	%


Interest and other income	3,808		4,443		(635)		(14)	%
Expenses:
Depreciation and amortization	12,716		12,238		478		4	%
Interest expense	11,040		9,827		1,213		12	%


Property taxes	1,390		880		510		58	%

Impairment of real estate investments	21,392		1,886		19,506		*


Property operating expenses	658		963		(305)		(32)	%

General and administrative	4,718		5,061		(343)		(7)	%
Other loss:

Gain (loss) on sale of real estate, net	2,028		(70)		2,098		*
Unrealized losses on other real estate related investments, net	(2,151)		(454)		(1,697)		*

•Not meaningful

Rental income. Rental income increased by $1.6 million as detailed below:


	Three Months Ended				Increase/(Decrease)
(in thousands)	June 30, 2023		March 31, 2023
Contractual cash rent	$	46,536	$	45,461	$	1,075
Tenant reimbursements	1,216		709		507
Total contractual rent(1)	47,752		46,170		1,582
Straight-line rent	(7)		(7)		—



Rental income	$	47,745	$	46,163	$	1,582

(1) Includes initial contractual cash rent, as adjusted for applicable rental escalators and rent increases due to capital expenditures funded by the Company. For tenants on a cash basis, this represents the lesser of the amount that would be recognized on a straight-line basis or cash that has been received. Total contractual cash rent increased by $1.6 million due to a $1.2 million increase in rental income from real estate investments made after January 1, 2023, a $0.5 million increase in tenant reimbursements, and a $0.4 million increase in rental rates for our existing tenants, partially offset by a $0.4 million decrease in rental income related to lower cash collections from tenants on a cash basis method of accounting and a $0.1 million decrease in rental income related to dispositions in June 2023.

Interest and other income. The $0.6 million, or 14%, decrease in interest and other income was primarily due to a prepayment penalty received of $0.5 million related to the prepayment of one mezzanine loan receivable during the three months ended March 31, 2023 and a decrease of $0.4 million due to repayment of the mezzanine loan, partially offset by an increase of $0.2 million of interest income on money market funds and an increase of $0.1 million of interest income on other loans due to rising interest rates and a higher number of days during the three months ended June 30, 2023 compared to the three months ended March 31, 2023.

Depreciation and amortization. The $0.5 million, or 4%, increase in depreciation and amortization was primarily due to an increase of $0.6 million due to acquisitions and capital improvements made after January 1, 2023, partially offset by a decrease of $0.1 million due to assets becoming fully depreciated after January 1, 2023.

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Interest expense. Interest expense increased by $1.2 million as detailed below:


	Change in interest expense for the three months ended June 30, 2023 compared to the three months ended March 31, 2023
	(in thousands)
Increase in outstanding borrowing amount for the Revolving Facility, net	$	985
Increase in interest rates for the Term Loan (as defined below)	187
Increase in interest rates for the Revolving Facility (as defined below)	41

Net change in interest expense	$	1,213

Property taxes. The $0.5 million, or 58%, increase in property taxes was primarily due to $0.4 million of changes in estimates during the three months ended June 30, 2023 of property taxes paid directly by us as a result of certain assets being designated as held for sale and a $0.1 million increase in property taxes due to the transfer of certain properties to new operators in March 2023 that do not make direct tax payments.

Impairment of real estate investments. During the three months ended June 30, 2023, we recognized an impairment charge of $21.4 million related to 12 properties classified as held for sale during the quarter. See above under “Recent Developments - Impairment of Real Estate Assets, Assets Held for Sale, and Asset Sales” for additional information. During the three months ended March 31, 2023, we recognized an impairment charge of $1.9 million related to four properties classified as held for sale during the quarter.

Property operating expenses. During the three months ended June 30, 2023 and March 31, 2023, we recognized $0.7 million and $1.0 million, respectively, of property operating expenses related to assets we plan to sell or repurpose, or have sold.

General and administrative expense. General and administrative expense decreased by $0.3 million as detailed below:


	Three Months Ended				Increase/(Decrease)
(in thousands)	June 30, 2023		March 31, 2023
Cash compensation	$	1,267	$	1,550	$	(283)
Incentive compensation	1,025		1,550		(525)
Share-based compensation	924		936		(12)
Professional services	704		474		230
Taxes and insurance	276		204		72
Other expenses	522		347		175
General and administrative expense	$	4,718	$	5,061	$	(343)

Gain (loss) on sale of real estate, net. During the three months ended June 30, 2023, we recorded a $2.1 million gain on sale of real estate related to the sale of one SNF and one ALF, partially offset by a $0.1 million loss on sale of real estate related to the sale of one ALF. During the three months ended March 31, 2023, we recorded a $0.1 million loss on sale of real estate related to the sale of one ALF.

Unrealized losses on other real estate related investments, net. During the three months ended June 30, 2023, we recorded a $1.9 million unrealized loss on three mortgage loans and one mezzanine loan receivable and a $0.3 million loss related to a loan origination fee paid. During the three months ended March 31, 2023, we recorded a $1.0 million unrealized loss on one mezzanine loan receivable, partially offset by a $0.5 million reversal of a previously recognized unrealized loss related to the prepayment of one mezzanine loan receivable.

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Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022:


	Six Months Ended				Increase (Decrease)		Percentage Difference
	June 30, 2023		June 30, 2022
	(dollars in thousands)
Revenues:
Rental income	$	93,908	$	92,813	$	1,095	1	%


Interest and other income	8,251		1,216		7,035		579	%
Expenses:
Depreciation and amortization	24,954		26,134		(1,180)		(5)	%
Interest expense	20,867		12,045		8,822		73	%


Property taxes	2,270		2,674		(404)		(15)	%

Impairment of real estate investments	23,278		61,384		(38,106)		(62)	%

Provision for loan losses, net	—		3,844		(3,844)		*
Property operating expenses	1,621		536		1,085		202	%

General and administrative	9,779		10,193		(414)		(4)	%
Other loss:

Gain on sale of real estate, net	1,958		186		1,772		*
Unrealized losses on other real estate related investments, net	(2,605)		—		(2,605)		*

•Not meaningful

Rental income. Rental income increased by $1.1 million as detailed below:


	Six Months Ended				Increase/(Decrease)
(in thousands)	June 30, 2023		June 30, 2022
Contractual cash rent	$	91,997	$	91,453	$	544
Tenant reimbursements	1,925		1,349		576
Total contractual rent(1)	93,922		92,802		1,120
Straight-line rent	(14)		11		(25)



Rental income	$	93,908	$	92,813	$	1,095

(1) Includes initial contractual cash rent, as adjusted for applicable rental escalators and rent increases due to capital expenditures funded by the Company. For tenants on a cash basis, this represents the lesser of the amount that would be recognized on a straight-line basis or cash that has been received. Total contractual cash rent increased by $1.1 million due to a $1.6 million increase in rental rates for our existing tenants, an increase of $1.2 million from real estate investments made after January 1, 2022, a $1.0 million write-off of uncollectible rent, and a $0.6 million increase in tenant reimbursements, partially offset by a $3.2 million decrease in rental income related to lower cash collections from tenants on a cash basis method of accounting and a $0.1 million decrease due to dispositions.

Interest and other income. The $7.0 million increase in interest and other income was primarily due to an increase of $7.1 million due to the origination of loans receivable after January 1, 2022 and a prepayment penalty of $0.5 million during the six months ended June 30, 2023, partially offset by a decrease of $0.4 million of interest income due to a loan repayment and a decrease of $0.2 million of interest income due to a loan origination fee received during the six months ended June 30, 2022.

Depreciation and amortization. The $1.2 million, or 5%, decrease in depreciation and amortization was primarily due to a decrease of $1.8 million due to assets becoming fully depreciated after January 1, 2022 and a decrease of $0.7 million due to classifying assets as held for sale after January 1, 2022, partially offset by an increase of $0.9 million related to new real estate investments and capital improvements made after January 1, 2022 and a $0.4 million increase due to reclassifying assets out of held for sale during the three months ended December 31, 2022.

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Interest expense. Interest expense increased by $8.8 million as detailed below:


	Change in interest expense for the six months ended June 30, 2023 compared to the six months ended June 30, 2022
	(in thousands)
Increase in interest rates for the Term Loan	$	4,425
Increase in interest rates for the Revolving Facility	2,282
Increase in outstanding borrowing amount for the Revolving Facility, net	1,941
Other changes in interest expense	174
Net change in interest expense	$	8,822

Property taxes. The $0.4 million, or 15%, decrease in property taxes was primarily due to a decrease of $0.5 million due to the sale of properties after January 1, 2022, partially offset by an increase of $0.1 million due to the transfer of certain properties to new operators in March 2023 that do not make direct tax payments.

Impairment of real estate investments. During the six months ended June 30, 2023, we recognized an impairment charge of $23.3 million related to 15 properties classified as held for sale. See above under “Recent Developments - Impairment of Real Estate Assets, Assets Held for Sale, and Asset Sales” for additional information. During the six months ended June 30, 2022, we recognized an aggregate impairment charge of $61.4 million related to 21 properties.

Provision for loan losses, net. During the six months ended June 30, 2022, we recorded a $4.6 million expected credit loss related to two other loans receivable that were placed on non-accrual status, partially offset by a $0.8 million recovery related to one other loan receivable that was previously written off. No such provision for loan losses was recorded during the six months ended June 30, 2023.

Property operating expenses. During the six months ended June 30, 2023 and June 30, 2022, we recognized $1.6 million and $0.5 million, respectively, of property operating expenses related to assets we plan to sell or repurpose, or have sold.

General and administrative expense. General and administrative expense decreased by $0.4 million as detailed below:


	Six Months Ended				Increase/(Decrease)
(in thousands)	June 30, 2023		June 30, 2022
Cash compensation	$	2,817	$	3,436	$	(619)
Incentive compensation	2,575		1,650		925
Share-based compensation	1,860		2,915		(1,055)
Professional services	1,179		888		291
Taxes and insurance	480		488		(8)
Other expenses	868		816		52
General and administrative expense	$	9,779	$	10,193	$	(414)

Gain on sale of real estate, net. During the six months ended June 30, 2023, we recorded a $2.1 million gain on sale of real estate related to the sale of one SNF and one ALF, partially offset by a $0.1 million loss on sale of real estate related to the sale of two ALFs. During the six months ended June 30, 2022, we recorded a $0.2 million gain on sale of real estate related to the sale of one SNF.

Unrealized losses on other real estate related investments, net. During the six months ended June 30, 2023, we recorded a $2.8 million unrealized loss on three mortgage loans receivable and one mezzanine loan receivable and a $0.3 million loss due to a loan origination fee paid, partially offset by a $0.5 million reversal of a previously recognized unrealized loss related to the prepayment of one mezzanine loan receivable. No unrealized losses were recognized during the six months ended June 30, 2022.

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Liquidity and Capital Resources

To qualify as a REIT for federal income tax purposes, we are required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, to our stockholders on an annual basis. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly dividends to common stockholders from cash flow from operating activities. All such dividends are at the discretion of our board of directors.

Our short-term liquidity requirements consist primarily of operating and interest expenses directly associated with our properties, including:

•interest expense and scheduled debt maturities on outstanding indebtedness;

•general and administrative expenses;

•dividend plans;

•operating lease obligations; and

•capital expenditures for improvements to our properties.

Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions and other investments (including mortgage and mezzanine loan originations) capital expenditures, and scheduled debt maturities. We intend to invest in and/or develop additional healthcare and seniors housing properties as suitable opportunities arise and so long as adequate sources of financing are available. We expect that future investments in and/or development of properties, including any improvements or renovations of current or newly-acquired properties, will depend on and will be financed by, in whole or in part, our existing cash, borrowings available to us under the Second Amended Credit Facility (as defined below), future borrowings or the proceeds from sales of shares of our common stock pursuant to our ATM Program or additional issuances of common stock or other securities. In addition, we may seek financing from U.S. government agencies, including through Fannie Mae and the U.S. Department of Housing and Urban Development, in appropriate circumstances in connection with acquisitions and refinancing of existing mortgage loans.

We believe that our expected operating cash flow from rent collections, interest payments on our other real estate related investments, and borrowings under our Second Amended Credit Facility, together with our cash balance of $1.1 million, available borrowing capacity of $320.0 million under the Revolving Facility, approximately $132.8 million in forward equity sales which can be settled at any time through the second quarter of 2024, before commissions and offering expenses, and availability of $367.2 million under the ATM Program, each at June 30, 2023, will be sufficient to meet ongoing debt service requirements, dividend plans, operating lease obligations, capital expenditures, working capital requirements and other needs for at least the next 12 months. We expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements. While we are currently pursuing the sale, re-tenanting or repurposing of certain of our assets in connection with our ongoing review and monitoring of our investment portfolio as described under “Recent Developments” above, we currently do not expect to sell any of our properties to meet liquidity needs, although we may do so in the future. Our quarterly cash dividend and any failure of our operators to pay rent or of our borrowers to make interest or principal payments may impact our available capital resources.

We have filed an automatic shelf registration statement with the U.S. Securities and Exchange Commission that expires in February 2026 and at or prior to such time we expect to file a new shelf registration statement. The shelf registration statement allows us or certain of our subsidiaries, as applicable, to offer and sell shares of common stock, preferred stock, warrants, rights, units and debt securities through underwriters, dealers or agents or directly to purchasers, in one or more offerings on a continuous or delayed basis, in amounts, at prices and on terms we determine at the time of the offering. On February 24, 2023, we entered into the ATM Program. In addition to the issuance and sale of shares of our common stock, we may also enter into one or more ATM forward contracts with sales agents for the sale of shares of our common stock under the ATM Program. See “At-The-Market Offering of Common Stock” for information regarding activity under the ATM Program.

Although we are subject to restrictions on our ability to incur indebtedness, we expect that we will be able to refinance existing indebtedness or incur additional indebtedness for acquisitions or other purposes, if needed. However, there can be no assurance that we will be able to refinance our indebtedness, incur additional indebtedness or access additional sources of capital, such as by issuing common stock or other debt or equity securities, on terms that are acceptable to us or at all.

As of June 30, 2023, we are in compliance with all debt covenants on our outstanding indebtedness.

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Cash Flows

The following table presents selected data from our condensed consolidated statements of cash flows for the periods presented (dollars in thousands):


	For the Six Months Ended June 30,
	2023		2022

Net cash provided by operating activities	$	66,986	$	68,302
Net cash used in investing activities	(176,644)		(125,644)
Net cash provided by financing activities	97,625		67,714
Net (decrease) increase in cash and cash equivalents	(12,033)		10,372
Cash and cash equivalents as of the beginning of period	13,178		19,895
Cash and cash equivalents as of the end of period	$	1,145	$	30,267

Net cash provided by operating activities decreased for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. Operating cash inflows are derived primarily from the rental payments received under our lease agreements, including as a result of new investments, and interest payments on our other real estate related investments. Operating cash outflows consist primarily of interest expense on our borrowings and general and administrative expenses. The net decrease of $1.3 million in cash provided by operating activities for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 is primarily due to an increase in cash paid for interest expense and operating expenses related to assets we plan to sell, have sold, or repurpose, partially offset by an increase in interest income received on our other real estate related investments, an increase in rental income received, and a decrease in cash paid for general and administrative expense.

Cash used in investing activities for the six months ended June 30, 2023 was primarily comprised of $200.0 million in acquisitions of real estate, investment in real estate related investments and other loans receivable and escrow deposits for potential acquisitions of real estate and $6.4 million of purchases of equipment, furniture and fixtures and improvements to real estate, partially offset by $15.3 million of principal payments received from our other real estate related investments and other loans receivable and $14.5 million in net proceeds from real estate sales. Cash used in investing activities for the six months ended June 30, 2022 was primarily comprised of $124.0 million in acquisitions of real estate and investments in real estate related and other loans and $3.6 million of purchases of equipment, furniture and fixtures and improvements to real estate, partially offset by $1.0 million in net proceeds from real estate sales and $1.0 million of payments received from other loans receivable.

Our cash flows provided by financing activities for the six months ended June 30, 2023 were primarily comprised of $155.0 million in borrowings under our Revolving Facility (as defined below), partially offset by $55.2 million in dividends paid, a $1.5 million net settlement adjustment on restricted stock and $0.6 million in costs paid for the issuance of common stock. Our cash flows provided by financing activities for the six months ended June 30, 2022 were primarily comprised of $125.0 million in borrowings under our Prior Credit Agreement (as defined below), partially offset by $52.8 million in dividends paid and a $4.5 million net settlement adjustment on restricted stock.

Material Cash Requirements

Our material cash requirements from known contractual and other obligations include:

3.875% Senior Unsecured Notes due 2028

On June 17, 2021, our wholly owned subsidiary, CTR Partnership, L.P. (the “Operating Partnership”), and its wholly owned subsidiary, CareTrust Capital Corp. (together with the Operating Partnership, the “Issuers”), completed a private offering of $400.0 million aggregate principal amount of 3.875% Senior Notes due 2028 (the “Notes”). The Notes mature on June 30, 2028. The Notes accrue interest at a rate of 3.875% per annum payable semiannually in arrears on June 30 and December 30 of each year, commencing on December 30, 2021. The obligations under the Notes are guaranteed, jointly and severally, on an unsecured basis, by us and all of our subsidiaries (other than the Issuers). As of June 30, 2023, we were in compliance with all applicable financial covenants under the indenture governing the Notes. See Note 7, Debt, to our condensed consolidated financial statements included in this report for further information about the Notes.

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Unsecured Revolving Credit Facility and Term Loan

On December 16, 2022, we, together with certain of our subsidiaries, entered into a second amended and restated credit and guaranty agreement with KeyBank National Association, as administrative agent, an issuing bank and swingline lender (the “Second Amended Credit Agreement”). The Operating Partnership is the borrower under the Second Amended Credit Agreement, and the obligations thereunder are guaranteed, jointly and severally, on an unsecured basis, by us and certain of our subsidiaries. The Second Amended Credit Agreement, which amends and restates our amended and restated credit and guaranty agreement, dated as of February 8, 2019 (as amended, the “Prior Credit Agreement”) provides for: (i) an unsecured revolving credit facility (the “Revolving Facility”) with revolving commitments in an aggregate principal amount of $600.0 million, including a letter of credit subfacility for 10% of the then available revolving commitments and a swingline loan subfacility for 10% of the then available revolving commitments and (ii) the continuation of the unsecured term loan credit facility which was previously extended under the Prior Credit Agreement (the “Term Loan” and together with the Revolving Facility, the “Second Amended Credit Facility”) in an aggregate principal amount of $200.0 million. Future borrowings under the Second Amended Credit Facility will be used for working capital purposes, for capital expenditures, to fund acquisitions and for general corporate purposes.

As of June 30, 2023, we had $200.0 million outstanding under the Term Loan and $280.0 million outstanding under the Revolving Facility. The Revolving Facility has a maturity date of February 9, 2027, and includes, at our sole discretion, two six-month extension options. The Term Loan has a maturity date of February 8, 2026.

The interest rates applicable to loans under the Revolving Facility are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.10% to 0.55% per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR (each as defined in the Second Amended Credit Agreement) plus a margin ranging from 1.10% to 1.55% per annum based on the debt to asset value ratio of the Company and our consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if we obtain certain specified investment grade ratings on our senior long-term unsecured debt). The interest rates applicable to loans under the Term Loan are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.50% to 1.20% per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR plus a margin ranging from 1.50% to 2.20% per annum based on the debt to asset value ratio of the Company and our consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if we obtain certain specified investment grade ratings on our senior long-term unsecured debt). In addition, the Operating Partnership will pay a facility fee on the revolving commitments under the Revolving Facility ranging from 0.15% to 0.35% per annum, based on the debt to asset value ratio of the Company and our consolidated subsidiaries (unless we obtain certain specified investment grade ratings on our senior long-term unsecured debt and the Operating Partnership elects to decrease the applicable margin as described above, in which case the Operating Partnership will pay a facility fee on the revolving commitments ranging from 0.125% to 0.30% per annum based off the credit ratings of our senior long-term unsecured debt).

As of June 30, 2023, we were in compliance with all applicable financial covenants under the Second Amended Credit Agreement. See Note 7, Debt, to our condensed consolidated financial statements included in this report for further information about the Second Amended Credit Agreement.

Capital Expenditures

As of June 30, 2023, we had committed to fund expansions, construction and capital improvements at certain triple-net leased facilities totaling $14.2 million, of which $2.7 million is subject to rent increase at the time of funding. We expect to fund the capital expenditures in the next one to two years. See Note 11, Commitments and Contingencies, to our condensed consolidated financial statements included in this report for further information regarding our obligation to finance certain capital expenditures under our triple-net leases.

Dividend Plans

We are required to pay dividends in order to maintain our REIT status and we expect to make quarterly dividend payments in cash with the annual dividend amount no less than 90% of our annual REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains. See Note 8, Equity, to our condensed consolidated financial statements included in this report for a summary of the cash dividends per share of our common stock declared by our board of directors for the three months ended June 30, 2023.

Critical Accounting Policies and Estimates

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Our condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information set forth in the Accounting Standards Codification, as published by the Financial Accounting Standards Board. GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Please refer to “Critical Accounting Policies and Estimates” in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 9, 2023, for further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. There have been no material changes in such critical accounting policies during the six months ended June 30, 2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our primary market risk exposure is interest rate risk with respect to our variable rate indebtedness.

Our Amended Credit Agreement provides for revolving commitments in an aggregate principal amount of $600.0 million and an unsecured term loan facility in an aggregate principal amount of $200.0 million from a syndicate of banks and other financial institutions.

The interest rates applicable to loans under the Revolving Facility are, at the Company’s option, equal to either a base rate plus a margin ranging from 0.10% to 0.55% per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR (each as defined in the Second Amended Credit Agreement) plus a margin ranging from 1.10% to 1.55% per annum based on the debt to asset value ratio of the Company and its consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if the Company obtains certain specified investment grade ratings on its senior long-term unsecured debt). The interest rates applicable to loans under the Term Loan are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.50% to 1.20% per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR plus a margin ranging from 1.50% to 2.20% per annum based on the debt to asset value ratio of the Company and its consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if the Company obtains certain specified investment grade ratings on its senior long-term unsecured debt). As of June 30, 2023, we had a $200.0 million Term Loan outstanding and had $280.0 million outstanding under the Revolving Facility.

An increase in interest rates could make the financing of any acquisition by us more costly as well as increase the costs of our variable rate debt obligations. Rising interest rates could also limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness. Increased inflation may also have a pronounced negative impact on the interest expense we pay in connection with our outstanding indebtedness, as these costs could increase at a rate higher than our rents.

Based on our outstanding debt balance as of June 30, 2023 described above and the interest rates applicable to our outstanding debt at June 30, 2023, assuming a 100 basis point increase in the interest rates related to our variable rate debt, interest expense would have increased approximately $2.4 million for the six months ended June 30, 2023.

We may, in the future, manage, or hedge, interest rate risks related to our borrowings by means of interest rate swap agreements. However, the REIT provisions of the Internal Revenue Code of 1986, as amended, substantially limit our ability to hedge our assets and liabilities. See “Risk Factors — Risks Related to Our Status as a REIT — Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities,” which is included in our Annual Report on Form 10-K for the year ended December 31, 2022. As of June 30, 2023, we had no swap agreements to hedge our interest rate risks. We also expect to manage our exposure to interest rate risk by maintaining a mix of fixed and variable rates for our indebtedness.

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Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and regulations and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of June 30, 2023, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, as of June 30, 2023.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The Company and its subsidiaries are and may become from time to time a party to various claims and lawsuits arising in the ordinary course of business, but none of the Company or any of its subsidiaries is, and none of their respective properties are, the subject of any material legal proceedings. Claims and lawsuits may include matters involving general or professional liability asserted against its tenants, which are the responsibility of its tenants and for which the Company is entitled to be indemnified by its tenants under the insurance and indemnification provisions in the applicable leases.

Item 1A. Risk Factors.

We have disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 risk factors which materially affect our business, financial condition, or results of operations. Other than revisions to the risk factor below, there have been no material changes from the risk factors previously disclosed in such reports.

Healthcare reform legislation impacts cannot accurately be predicted and could adversely affect our results of operations.

We and the healthcare operators leasing our properties depend on the healthcare industry and are susceptible to risks associated with healthcare reform. Legislative proposals are introduced each year that would introduce major changes in the healthcare system, both nationally and at the state level. For example, we believe that efforts may be made to, among other things, transition Federal payment programs further in the direction of value based care, but we cannot predict whether or in what form any of these measures may be enacted, or what effect they would have on our business or the businesses of our tenants if enacted. Efforts may also be made to reduce the age at which individuals become eligible for Medicare, which could have an adverse impact on our tenants because Medicare sometimes reimburses long term care providers at rates lower than those paid by commercial payors. In addition, the Biden Administration announced a focus on implementing minimum staffing requirements and increased inspections as part of nursing home reforms announced in the 2022 State of the Union Address, and in July 2022, CMS announced it was evaluating a proposed federal staffing mandate for SNFs. Specifically, CMS sought input on establishing minimum staffing requirements for long-term care facilities and issued updates to guidance on minimum health and safety standards that long-term care facilities must meet to participate in Medicare and Medicaid and updated and developed new guidance in the State Operations Manual to address issues that significantly affect residents of long-term care facilities. CMS has announced that it is continuing to review the comments it received in response to its request for information on establishing minimum staffing requirements for long-term care facilities, and that it remains committed to proposing a minimum staffing standard. It is uncertain whether such a mandate will be implemented and, if it is, whether it will be accompanied by additional funding to offset any increased staffing requirements for our operators. If additional funding is unavailable at sufficient levels or at all, a mandate to increase staffing levels in SNFs may have a material adverse effect on the operating results and financial condition of our tenants.

Our tenants are subject to extensive federal, state and local laws and regulations affecting the healthcare industry that include those relating to, among other things, licensure, conduct of operations, ownership of facilities, addition of facilities and equipment, allowable costs, services, prices for services, qualified beneficiaries, quality of care, patient rights and insurance, fraudulent or abusive behavior, and financial and other arrangements that may be entered into by healthcare providers. See “Government Regulation, Licensing and Enforcement” in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2022 for more information. If our tenants or operators fail to comply with the laws, regulations and other requirements applicable to their businesses and the operation of our properties, they could become ineligible to receive reimbursement from governmental and private third-party payor programs, face bans on admissions of new patients or residents, suffer civil or criminal penalties or be required to make significant operational changes. We believe that additional resources may be dedicated to regulatory enforcement, which could increase our tenants’ costs of doing business and negatively impact their ability to pay their rent obligations to us. Changes in enforcement policies by federal and state governments have also resulted in a significant increase in inspection rates, citations of regulatory deficiencies and sanctions, including terminations from Medicare and Medicaid programs, bars on Medicare and Medicaid payments for new admissions, civil monetary penalties and criminal penalties. Our tenants and operators could be forced to expend considerable resources responding to an investigation, lawsuit or other enforcement action under applicable laws or regulations. Additionally, if our tenants’ residents do not have insurance, it could adversely impact the tenants’ ability to satisfy their obligation to us. We cannot predict whether any future legislative proposals will be adopted or, if adopted, the impact these proposals would have on our tenants or our business.

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Item 5. Other Information.

None.

Item 6. Exhibits.


Exhibit Number						Description of the Document


3.1						Articles of Amendment and Restatement of CareTrust REIT, Inc. (Exhibit 3.1 to the Company’s Registration Statement on Form 10, filed on May 13, 2014, is incorporated herein by reference).

3.2						Articles of Amendment, dated May 30, 2018, to the Articles of Amendment and Restatement of CareTrust REIT, Inc. (Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on May 31, 2018, is incorporated herein by reference).

3.3						Amended and Restated Bylaws of CareTrust REIT, Inc. (Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on March 7, 2019, is incorporated herein by reference).

*31.1						Certification of Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2						Certification of Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

**32.1						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

*101.SCH						Inline XBRL Taxonomy Extension Schema Document

*101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

*101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

*101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

*101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

*104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith

** Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	CareTrust REIT, Inc.
August 3, 2023	By:	/s/ David M. Sedgwick
		David M. Sedgwick
		President and Chief Executive Officer (duly authorized officer)

August 3, 2023	By:	/s/ William M. Wagner
		William M. Wagner
		Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)

Exhibit 31.1

CERTIFICATION

I, David M. Sedgwick, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CareTrust REIT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



By:						/s/ David M. Sedgwick
						David M. Sedgwick
						President and Chief Executive Officer

Date: August 3, 2023

Exhibit 31.2

CERTIFICATION

I, William M. Wagner, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CareTrust REIT, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



By:						/s/ William M. Wagner
						William M. Wagner
						Chief Financial Officer and Treasurer

Date: August 3, 2023

Exhibit 32.1

Certification of Chief Executive Officer and

Chief Financial Officer Pursuant to

18 U.S.C. Section 1350, As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of CareTrust REIT, Inc. (the “Company”) for the quarterly period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), David M. Sedgwick, as President and Chief Executive Officer of the Company, and William M. Wagner, as Chief Financial Officer and Treasurer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


						/s/ David M. Sedgwick
Name:						David M. Sedgwick
Title:						President and Chief Executive Officer
Date:						August 3, 2023

						/s/ William M. Wagner
Name:						William M. Wagner
Title:						Chief Financial Officer and Treasurer
Date:						August 3, 2023

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2023	Aug. 02, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-36181
Entity Registrant Name	CareTrust REIT, Inc.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	46-3999490
Entity Address, Address Line One	905 Calle Amanecer
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	San Clemente
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92673
City Area Code	949
Local Phone Number	542-3130
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	CTRE
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		99,476,284
Entity Central Index Key	0001590717
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets:
Real estate investments, net	$ 1,528,234	$ 1,421,410
Other real estate related investments, at fair value (including accrued interest of $1,136 as of June 30, 2023 and $1,320 as of December 31, 2022)	166,822	156,368
Assets held for sale, net	21,554	12,291
Cash and cash equivalents	1,145	13,178
Accounts and other receivables	387	416
Prepaid expenses and other assets, net	14,029	11,690
Deferred financing costs, net	4,781	5,428
Total assets	1,736,952	1,620,781
Liabilities and Equity:
Senior unsecured notes payable, net	395,594	395,150
Senior unsecured term loan, net	199,454	199,348
Unsecured revolving credit facility	280,000	125,000
Accounts payable, accrued liabilities and deferred rent liabilities	21,039	24,360
Dividends payable	27,843	27,550
Total liabilities	923,930	771,408
Commitments and contingencies (Note 11)
Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022	0	0
Common stock, $0.01 par value; 500,000,000 shares authorized, 99,124,082 and 99,010,112 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	991	990
Additional paid-in capital	1,245,717	1,245,337
Cumulative distributions in excess of earnings	(433,686)	(396,954)
Total equity	813,022	849,373
Total liabilities and equity	$ 1,736,952	$ 1,620,781

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Other real estate related investments, accrued interest	$ 1,136	$ 1,320
Preferred stock, par value (in usd per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	100,000,000	100,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	500,000,000	500,000,000
Common stock, issued (in shares)	99,124,082	99,010,112
Common stock, outstanding (in shares)	99,124,082	99,010,112

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues:
Rental income	$ 47,745	$ 46,806	$ 93,908	$ 92,813
Interest and other income	3,808	747	8,251	1,216
Total revenues	51,553	47,553	102,159	94,029
Expenses:
Depreciation and amortization	12,716	12,559	24,954	26,134
Interest expense	11,040	6,303	20,867	12,045
Property taxes	1,390	1,254	2,270	2,674
Impairment of real estate investments	21,392	1,701	23,278	61,384
Provision for loan losses, net	0	0	0	3,844
Property operating expenses	658	89	1,621	536
General and administrative	4,718	4,978	9,779	10,193
Total expenses	51,914	26,884	82,769	116,810
Other (loss) income:
Gain on sale of real estate, net	2,028	0	1,958	186
Unrealized losses on other real estate related investments, net	(2,151)	0	(2,605)	0
Total other (loss) income	(123)	0	(647)	186
Net (loss) income	$ (484)	$ 20,669	$ 18,743	$ (22,595)
(Loss) earnings per common share:
Basic (in usd per share)	$ (0.01)	$ 0.21	$ 0.19	$ (0.24)
Diluted (in usd per share)	$ (0.01)	$ 0.21	$ 0.19	$ (0.24)
Weighted-average number of common shares:
Basic (in shares)	99,117	96,564	99,090	96,487
Diluted (in shares)	99,117	96,598	99,194	96,487

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Cumulative Distributions in Excess of Earnings
Beginning balance (in shares) at Dec. 31, 2021		96,296,673
Beginning balance at Dec. 31, 2021	$ 915,757	$ 963	$ 1,196,839	$ (282,045)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Vesting of restricted common stock, net of shares withheld for employee taxes (in shares)		190,393
Vesting of restricted common stock, net of shares withheld for employee taxes	(2,772)	$ 2	(2,774)
Amortization of stock-based compensation	1,521		1,521
Common dividends	(26,659)			(26,659)
Net income (loss)	(43,264)			(43,264)
Ending balance (in shares) at Mar. 31, 2022		96,487,066
Ending balance at Mar. 31, 2022	844,583	$ 965	1,195,586	(351,968)
Beginning balance (in shares) at Dec. 31, 2021		96,296,673
Beginning balance at Dec. 31, 2021	915,757	$ 963	1,196,839	(282,045)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(22,595)
Ending balance (in shares) at Jun. 30, 2022		96,605,112
Ending balance at Jun. 30, 2022	838,268	$ 966	1,195,282	(357,980)
Beginning balance (in shares) at Mar. 31, 2022		96,487,066
Beginning balance at Mar. 31, 2022	844,583	$ 965	1,195,586	(351,968)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Vesting of restricted common stock, net of shares withheld for employee taxes (in shares)		118,046
Vesting of restricted common stock, net of shares withheld for employee taxes	(1,697)	$ 1	(1,698)
Amortization of stock-based compensation	1,394		1,394
Common dividends	(26,681)			(26,681)
Net income (loss)	20,669			20,669
Ending balance (in shares) at Jun. 30, 2022		96,605,112
Ending balance at Jun. 30, 2022	$ 838,268	$ 966	1,195,282	(357,980)
Beginning balance (in shares) at Dec. 31, 2022	99,010,112	99,010,112
Beginning balance at Dec. 31, 2022	$ 849,373	$ 990	1,245,337	(396,954)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Vesting of restricted common stock, net of shares withheld for employee taxes (in shares)		87,978
Vesting of restricted common stock, net of shares withheld for employee taxes	(1,479)	$ 1	(1,480)
Amortization of stock-based compensation	936		936
Common dividends	(27,738)			(27,738)
Net income (loss)	19,227			19,227
Ending balance (in shares) at Mar. 31, 2023		99,098,090
Ending balance at Mar. 31, 2023	$ 840,319	$ 991	1,244,793	(405,465)
Beginning balance (in shares) at Dec. 31, 2022	99,010,112	99,010,112
Beginning balance at Dec. 31, 2022	$ 849,373	$ 990	1,245,337	(396,954)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ 18,743
Ending balance (in shares) at Jun. 30, 2023	99,124,082	99,124,082
Ending balance at Jun. 30, 2023	$ 813,022	$ 991	1,245,717	(433,686)
Beginning balance (in shares) at Mar. 31, 2023		99,098,090
Beginning balance at Mar. 31, 2023	840,319	$ 991	1,244,793	(405,465)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Vesting of restricted common stock (in shares)		25,992
Amortization of stock-based compensation	924		924
Common dividends	(27,737)			(27,737)
Net income (loss)	$ (484)			(484)
Ending balance (in shares) at Jun. 30, 2023	99,124,082	99,124,082
Ending balance at Jun. 30, 2023	$ 813,022	$ 991	$ 1,245,717	$ (433,686)

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022
Statement of Stockholders' Equity [Abstract]
Common dividends (in usd per share)	$ 0.28	$ 0.28	$ 0.275	$ 0.275

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net income (loss)	$ 18,743	$ (22,595)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization (including below-market ground leases)	24,983	26,167
Amortization of deferred financing costs	1,217	1,040
Unrealized losses on other real estate related investments, net	2,605	0
Amortization of stock-based compensation	1,860	2,915
Straight-line rental income	14	(11)
Adjustment for collectibility of rental income	0	977
Noncash interest income	184	(13)
Gain on sale of real estate, net	(1,958)	(186)
Impairment of real estate investments	23,278	61,384
Provision for loan losses, net	0	3,844
Change in operating assets and liabilities:
Accounts and other receivables	14	578
Prepaid expenses and other assets, net	(330)	(1,724)
Accounts payable, accrued liabilities and deferred rent liabilities	(3,624)	(4,074)
Net cash provided by operating activities	66,986	68,302
Cash flows from investing activities:
Acquisitions of real estate, net of deposits applied	(172,453)	(21,915)
Purchases of equipment, furniture and fixtures and improvements to real estate	(6,380)	(3,628)
Investment in real estate related investments and other loans receivable	(27,262)	(102,086)
Principal payments received on real estate related investments and other loans receivable	15,287	1,026
Escrow deposits for potential acquisitions of real estate	(300)	0
Net proceeds from sales of real estate	14,464	959
Net cash used in investing activities	(176,644)	(125,644)
Cash flows from financing activities:
Proceeds from (costs paid for) the issuance of common stock, net	(629)	0
Borrowings under unsecured revolving credit facility	155,000	125,000
Payments of deferred financing costs	(21)	0
Net-settle adjustment on restricted stock	(1,479)	(4,469)
Dividends paid on common stock	(55,246)	(52,817)
Net cash provided by financing activities	97,625	67,714
Net (decrease) increase in cash and cash equivalents	(12,033)	10,372
Cash and cash equivalents as of the beginning of period	13,178	19,895
Cash and cash equivalents as of the end of period	1,145	30,267
Supplemental disclosures of cash flow information:
Interest paid	21,000	10,987
Supplemental schedule of noncash investing and financing activities:
Increase in dividends payable	294	522
Right-of-use asset obtained in exchange for new operating lease obligation	369	0
Transfer of pre-acquisition costs to acquired assets	0	7
Sale of real estate settled with notes receivable	$ 2,000	$ 0

ORGANIZATION	6 Months Ended
ORGANIZATION	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ORGANIZATION	ORGANIZATIONDescription of Business—CareTrust REIT, Inc.’s (“CareTrust REIT” or the “Company”) primary business consists of acquiring, financing, developing and owning real property to be leased to third-party tenants in the healthcare sector. As of June 30, 2023, the Company owned and leased to independent operators, 224 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 23,694 operational beds and units located in 28 states with the highest concentration of properties by rental income located in California, Texas, Louisiana, Idaho and Arizona. As of June 30, 2023, the Company also had other real estate related investments consisting of five real estate secured loans receivable and one mezzanine loan receivable with a carrying value of $166.8 million.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Jun. 30, 2023
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of Presentation—The accompanying condensed consolidated financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all of the disclosures required by GAAP for a complete set of annual audited financial statements. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. In the opinion of management, all adjustments which are of a normal and recurring nature and considered necessary for a fair presentation of the results of the interim periods presented have been included. The results of operations for the interim periods are not necessarily indicative of results for the full year. All intercompany transactions and account balances within the Company have been eliminated.

REAL ESTATE INVESTMENTS, NET

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

REAL ESTATE INVESTMENTS, NET

The following table summarizes the Company’s investment in owned properties held for use at June 30, 2023 and December 31, 2022 (dollars in thousands):


	June 30, 2023		December 31, 2022
Land	$	266,010	$	238,738
Buildings and improvements	1,575,661		1,483,133
Integral equipment, furniture and fixtures	97,755		97,199
Identified intangible assets	2,832		2,832

Real estate investments	1,942,258		1,821,902
Accumulated depreciation and amortization	(414,024)		(400,492)

Real estate investments, net	$	1,528,234	$	1,421,410


Year	Amount
2023 (six months)	$	98,155
2024	197,155
2025	198,310
2026	198,853
2027	195,687
2028	193,433
Thereafter	941,966
Total	$	2,023,559

Tenant Purchase Options

Asset Type(1)

Properties

Lease Expiration

Option Period Open Date(2)

Option Type(3)

Current Cash Rent(4)

SNF

March 2029

4/1/2022

(5)

A / B(7)

832

SNF / Campus

(8)

October 2032

1/1/2024

(6)

1,097

SNF

November 2034

12/1/2024

(5)

3,891

(2) The Company has not received notice of exercise for the option periods that are currently open.

(3) Option type includes:

A - Fixed base price.

B - Fixed capitalization rate on lease revenue.

(4) Based on annualized cash revenue for contracts in place as of June 30, 2023.

(5) Option window is open until the expiration of the lease term.

(6) Option window is open for six months from the option period open date.

(7) Purchase option reflects two option types.

(8) Includes one property classified as held for sale as of June 30, 2023.

Rental Income

The following table summarizes components of the Company’s rental income (dollars in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Rental Income	2023		2022		2023		2022
Contractual rent due(1)	$	47,752	$	46,801	$	93,922	$	93,779
Straight-line rent	(7)		5		(14)		11
Adjustment for collectibility(2)	—		—		—		(977)


Total	$	47,745	$	46,806	$	93,908	$	92,813

Recent Real Estate Acquisitions

The following table summarizes the Company’s acquisitions for the six months ended June 30, 2023 (dollars in thousands):


Type of Property	Purchase Price(1)		Initial Annual Cash Rent(2)		Number of Properties	Number of Beds/Units(3)
Skilled nursing	$	107,858	$	9,085	7	871
Multi-service campuses	25,276		1,916		1	168
Assisted living	39,319		3,495		4	241
Total	$	172,453	$	14,496	12	1,280

(1) Purchase price includes capitalized acquisition costs.

(2) Initial annual cash rent represents initial cash rent for the first twelve months excluding the impact of rent abatement in the first one to three months, if applicable.

(3) The number of beds/units includes operating beds at the acquisition date.

Lease Amendments

IMPAIRMENT OF REAL ESTATE INVESTMENTS, ASSETS HELD FOR SALE, NET AND ASSET SALES

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

IMPAIRMENT OF REAL ESTATE INVESTMENTS, ASSETS HELD FOR SALE, NET AND ASSET SALES

IMPAIRMENT OF REAL ESTATE INVESTMENTS, ASSETS HELD FOR SALE, NET AND ASSET SALESDuring the three and six months ended June 30, 2023, the Company recognized an impairment charge on 12 and 15 facilities of $21.4 million and $23.3 million, respectively, which is reported in impairment of real estate investments in the condensed consolidated statements of operations. As of June 30, 2023, there were 15 facilities classified as held for sale, all of which have been marked down to fair value and considered Level 3 measurements within the fair value hierarchy. During the three and six months ended June 30, 2022, the Company recognized an impairment charge on one and 21 facilities of $1.7 million and $61.4 million, respectively.

Asset Sales and Held for Sale Reclassifications

The following table summarizes the Company’s dispositions for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Number of facilities	3		—		4		1
Net sales proceeds(1)	$	13,234	$	—	$	16,464	$	959
Net carrying value	11,206		—		14,506		773
Net gain on sale	$	2,028	$	—	$	1,958	$	186

The following table summarizes the Company’s assets held for sale activity for the periods presented (dollars in thousands):


	Net Carrying Value		Number of Facilities
December 31, 2022	$	12,291	5
Additions to assets held for sale	47,047		14
Assets sold	(14,506)		(4)
Impairment of real estate held for sale	(23,278)		—

June 30, 2023	$	21,554	15

OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS

6 Months Ended

Jun. 30, 2023

Investments, All Other Investments [Abstract]

OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS

As of June 30, 2023 and December 31, 2022, the Company’s other real estate related investments, at fair value, consisted of the following (dollar amounts in thousands):


								As of June 30, 2023
Investment	Facility Count and Type	Principal Balance as of June 30, 2023		Book Value as of June 30, 2023		Book Value as of December 31, 2022		Weighted Average Contractual Interest Rate			Maturity Date
Senior mortgage secured loan receivable	18 SNF/Campus	$	75,000	$	71,488	$	72,543	8.4	%	(1)	6/30/2027
Mortgage secured loan receivable	5 SNF	22,250		21,208		21,345		10.6	%	(2)	8/1/2025
Mortgage secured loan receivable	4 SNF	24,900		23,503		23,796		9.0	%	(2)	9/8/2025
Mortgage secured loan receivable(3)	1 ALF	2,000		2,000		—		9.0	%		5/31/2024
Mortgage secured loan receivable(4)	2 SNF Campus / ILF	25,993		25,993		—		9.0	%		6/29/2033
Mezzanine loan receivable(5)	9 SNF	—		—		14,672		—			—
Mezzanine loan receivable	18 SNF/Campus	25,000		22,630		24,012		11.0	%		6/30/2032
		$	175,143	$	166,822	$	156,368

(1) Rate is net of subservicing fee.

(2) Term secured overnight financing rate (“SOFR”) used as of June 30, 2023 was 5.11%. Rates are net of subservicing fees.

(5) Mezzanine loan was prepaid during the six months ended June 30, 2023.

The following table summarizes the Company’s other real estate related investments activity for the six months ended June 30, 2023 and 2022 (dollars in thousands):


	Six Months Ended June 30,
	2023		2022
Origination of other real estate related investments	$	28,243	$	100,000
Accrued interest, net	(184)		13
Unrealized losses on other real estate related investments, net	(2,605)		—
Repayments of other real estate related investments	(15,000)		—
Net increase in other real estate related investments, at fair value	$	10,454	$	100,013


							As of June 30, 2023
Investment	Principal Balance as of June 30, 2023		Book Value as of June 30, 2023		Book Value as of December 31, 2022		Weighted Average Contractual Interest Rate		Maturity Date
Other loans receivable	$	10,328	$	10,333	$	9,600	8.5	%	8/31/2023 - 9/30/2025
Expected credit loss	—		(2,094)		(2,094)
Total	$	10,328	$	8,239	$	7,506

The following table summarizes the Company’s other loans receivable activity for the six months ended June 30, 2023 and 2022 (dollars in thousands):


	Six Months Ended June 30,
	2023		2022
Origination of loans receivable	$	1,019	$	2,500
Principal payments	(287)		(276)
Accrued interest, net	1		(2)
Provision for loan losses, net	—		(4,594)

Net increase (decrease) in other loans receivable	$	733	$	(2,372)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Investment	2023		2022		2023		2022
Mortgage secured loans receivable	$	2,762	$	17	$	5,466	$	17
Mezzanine loans receivable	695		713		2,278		1,163


Other	351		17		507		36
Total	$	3,808	$	747	$	8,251	$	1,216

FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

Level 1 – Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

Items Measured at Fair Value on a Recurring Basis


	Level 1		Level 2		Level 3		Balance as of June 30, 2023
Assets:
Mortgage secured loans receivable	$	—	$	—	$	144,192	$	144,192
Mezzanine loans receivable	—		—		22,630		22,630
Total	$	—	$	—	$	166,822	$	166,822


	Level 1		Level 2		Level 3		Balance as of December 31, 2022
Assets:
Mortgage secured loans receivable	$	—	$	—	$	117,684	$	117,684
Mezzanine loans receivable	—		—		38,684		38,684
Total	$	—	$	—	$	156,368	$	156,368

The following table details the Company’s assets measured at fair value on a recurring basis using Level 3 inputs (dollars in thousands):


	Investments in Real Estate Secured Loans		Investments in Mezzanine Loans
Balance at December 31, 2022	$	117,684	$	38,684
Loan originations	28,243		—
Accrued interest, net	(21)		(163)
Unrealized losses on other real estate related investments, net	(1,714)		(891)
Repayments	—		(15,000)
Balance as of June 30, 2023	$	144,192	$	22,630

determine the fair value of the secured and mezzanine loans receivable. As of June 30, 2023 and December 31, 2022, the Company did not have any loans that were 90 days or more past due.

Type

Book Value as of June 30, 2023

Valuation Technique

Unobservable Inputs

Range

Mortgage secured loans receivable

144,192

Discounted cash flow

Discount Rate

10% - 14%

Mezzanine loan receivable

22,630

Discounted cash flow

Discount Rate

12% - 14%

For the six months ended June 30, 2023, there were no classification changes in assets and liabilities with Level 3 inputs in the fair value hierarchy.

Items Disclosed at Fair Value


		June 30, 2023						December 31, 2022
	Level	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value



Financial liabilities:
Senior unsecured notes payable	2	$	400,000	$	395,594	$	346,588	$	400,000	$	395,150	$	345,036

Senior unsecured notes payable: The fair value of the Notes was determined using third-party quotes derived from orderly trades.

DEBT

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

DEBT

The following table summarizes the balance of the Company’s indebtedness as of June 30, 2023 and December 31, 2022 (dollars in thousands):


	June 30, 2023						December 31, 2022
	Principal Amount		Deferred Loan Fees		Carrying Value		Principal Amount		Deferred Loan Fees		Carrying Value
Senior unsecured notes payable	$	400,000	$	(4,406)	$	395,594	$	400,000	$	(4,850)	$	395,150
Senior unsecured term loan	200,000		(546)		199,454		200,000		(652)		199,348
Unsecured revolving credit facility	280,000		—		280,000		125,000		—		125,000
	$	880,000	$	(4,952)	$	875,048	$	725,000	$	(5,502)	$	719,498

Senior Unsecured Notes Payable

As of June 30, 2023, the Company was in compliance with all applicable financial covenants under the indenture governing the Notes.

Unsecured Revolving Credit Facility and Term Loan

As of June 30, 2023, the Company was in compliance with all applicable financial covenants under the Second Amended Credit Agreement.

EQUITY

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

EQUITY

Common Stock

There was no ATM Program activity (or activity under any predecessor at-the-market equity offering programs) for the three and six months ended June 30, 2022.

As of June 30, 2023, the Company had $367.2 million available for future issuances under the ATM Program.


	For the Three Months Ended
	March 31, 2023		June 30, 2023
Dividends declared per share	$	0.28	$	0.28
Dividends payment date	April 14, 2023		July 14, 2023
Dividends payable as of record date(1)	$	27,846	$	27,853
Dividends record date	March 31, 2023		June 30, 2023

(1) Dividends payable includes dividends on performance stock awards that will be paid if and when the shares subject to such awards vest if deemed probable of meeting their performance condition.

STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

The following table summarizes the status of the restricted stock award and performance award activity for the six months ended June 30, 2023:


	Shares	Weighted Average Share Price
Unvested balance at December 31, 2022	573,609	$	20.63
Granted:


Board Awards	24,768	19.38
Vested	(185,767)	20.94
Forfeited	(61,680)	21.19
Unvested balance at June 30, 2023	350,930	$	20.28

As of June 30, 2023, the weighted-average remaining vesting period of such awards was 1.7 years.

The following table summarizes the stock-based compensation expense recognized for the periods presented (dollars in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Stock-based compensation expense	$	924	$	1,394	$	1,860	$	2,915

(LOSS) EARNINGS PER COMMON SHARE

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

(LOSS) EARNINGS PER COMMON SHARE


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net (loss) income	$	(484)	$	20,669	$	18,743	$	(22,595)
Less: Net income allocated to participating securities	(89)		(94)		(178)		(211)
Numerator for basic and diluted earnings available to common stockholders	$	(573)	$	20,575	$	18,565	$	(22,806)
Denominator:
Weighted-average basic common shares outstanding	99,117		96,564		99,090		96,487
Dilutive potential common shares - performance stock awards	—		34		90		—
Dilutive potential common shares - forward equity agreements	—		—		14		—
Weighted-average diluted common shares outstanding	99,117		96,598		99,194		96,487

(Loss) earnings per common share, basic	$	(0.01)	$	0.21	$	0.19	$	(0.24)
(Loss) earnings per common share, diluted	$	(0.01)	$	0.21	$	0.19	$	(0.24)
Antidilutive unvested restricted stock awards, total shareholder return units, performance awards, and forward equity shares excluded from the computation	500		341		316		431

COMMITMENTS AND CONTINGENCIES	6 Months Ended
COMMITMENTS AND CONTINGENCIES	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES The Company and its subsidiaries are and may become from time to time a party to various claims and lawsuits arising in the ordinary course of business, which are not individually or in the aggregate anticipated to have a material adverse effect on the Company’s results of operations, financial condition or cash flows. Claims and lawsuits may include matters involving general or professional liability asserted against the Company’s tenants, which are the responsibility of the Company’s tenants and for which the Company is entitled to be indemnified by its tenants under the insurance and indemnification provisions in the applicable leases. Capital expenditures for each property leased under the Company’s triple-net leases are generally the responsibility of the tenant, except that, for the facilities leased to subsidiaries of The Ensign Group, Inc., under multiple long-term leases, and Pennant, the tenant will have an option to require the Company to finance certain capital expenditures up to an aggregate of 20% of the Company’s initial investment in such property, subject to a corresponding rent increase at the time of funding. For the Company’s other triple-net master leases, the tenants also have the option to request capital expenditure funding that would generally be subject to a corresponding rent increase at the time of funding, which are subject to tenant compliance with the conditions to the Company’s approval and funding of their requests. As of June 30, 2023, the Company had committed to fund expansions, construction and capital improvements at certain triple-net leased facilities totaling $14.2 million, of which $2.7 million is subject to rent increase at the time of funding.

CONCENTRATION OF RISK

6 Months Ended

Jun. 30, 2023

Risks and Uncertainties [Abstract]

CONCENTRATION OF RISK


	Number of Facilities			Number of Beds/Units			Percentage of Total Revenue(1)
Operator	SNF	Campus	ALF/ILF	SNF	Campus	ALF/ILF	Three Months Ended		Six Months Ended
June 30, 2023
Ensign(2)	83	8	7	8,741	997	661	36	%	36	%
Priority Management Group	13	2	—	1,742	402	—	16	%	16	%

June 30, 2022
Ensign(2)	83	8	7	8,756	997	678	35	%	35	%
Priority Management Group	13	2	—	1,742	402	—	16	%	16	%

(1) The Company’s rental income, exclusive of operating expense reimbursements and adjustments for collectibility.


	Number of Facilities			Number of Beds/Units			Percentage of Total Revenue(1)
State	SNF	Campus	ALF/ILF	SNF	Campus	ALF/ILF	Three Months Ended		Six Months Ended
June 30, 2023
CA	29	9	5	3,307	1,527	437	28	%	28	%
TX	40	3	2	5,126	536	212	23	%	23	%

June 30, 2022
CA	27	8	5	3,048	1,359	449	27	%	26	%
TX	38	3	3	4,849	536	242	22	%	22	%

(1) Represents the Company’s rental income, exclusive of operating expense reimbursements and adjustments for collectibility.

SUBSEQUENT EVENTS	6 Months Ended
SUBSEQUENT EVENTS	Jun. 30, 2023
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTSThe Company evaluates subsequent events in accordance with ASC 855, Subsequent Events. The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued. Recent Investments On July 17, 2023, the Company extended a $15.7 million mortgage secured loan to a skilled nursing real estate owner. The mortgage loan is secured by a two-facility skilled nursing portfolio in Florida, operated by a regional skilled nursing operator. The loan bears interest at 9.0%, payable monthly. The term loan is set to mature on August 1, 2028, with one five-year extension option and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee ranging from 2% to 3% of the loan plus unpaid interest payments; provided, however, that no exit fee is payable in connection with the loan being refinanced pursuant to a loan (or loans) provided by Fannie Mae, Freddie Mac, Federal Housing Administration, or a similar governmental authority. The investment was funded using proceeds from the Revolving Facility as well as cash on hand. At-The-Market Offering of Common Stock In July 2023, the Company executed forward equity sales under the ATM Program with a financial institution acting as a forward purchaser to sell 3,839,348 shares of common stock at a weighted average sales price of $19.94 per share before commissions and offering expenses. The Company did not receive any proceeds from the sale of its shares of common stock by the forward sellers.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Jun. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation—The accompanying condensed consolidated financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all of the disclosures required by GAAP for a complete set of annual audited financial statements. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. In the opinion of management, all adjustments which are of a normal and recurring nature and considered necessary for a fair presentation of the results of the interim periods presented have been included. The results of operations for the interim periods are not necessarily indicative of results for the full year. All intercompany transactions and account balances within the Company have been eliminated.
Fair Value Measurements	The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. GAAP guidance defines three levels of inputs that may be used to measure fair value: Level 1 – Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. Level 3 – Unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques. The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and, depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. Changes in the type of inputs may result in a reclassification for certain assets. The Company does not expect that changes in classifications between levels will be frequent.

REAL ESTATE INVESTMENTS, NET (Tables)

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Schedule of Investment in Owned Properties

The following table summarizes the Company’s investment in owned properties held for use at June 30, 2023 and December 31, 2022 (dollars in thousands):


	June 30, 2023		December 31, 2022
Land	$	266,010	$	238,738
Buildings and improvements	1,575,661		1,483,133
Integral equipment, furniture and fixtures	97,755		97,199
Identified intangible assets	2,832		2,832

Real estate investments	1,942,258		1,821,902
Accumulated depreciation and amortization	(414,024)		(400,492)

Real estate investments, net	$	1,528,234	$	1,421,410

Schedule of Total Future Contractual Minimum Rental Income


Year	Amount
2023 (six months)	$	98,155
2024	197,155
2025	198,310
2026	198,853
2027	195,687
2028	193,433
Thereafter	941,966
Total	$	2,023,559

Schedule Of Tenant Purchase Options

Asset Type(1)

Properties

Lease Expiration

Option Period Open Date(2)

Option Type(3)

Current Cash Rent(4)

SNF

March 2029

4/1/2022

(5)

A / B(7)

832

SNF / Campus

(8)

October 2032

1/1/2024

(6)

1,097

SNF

November 2034

12/1/2024

(5)

3,891

(2) The Company has not received notice of exercise for the option periods that are currently open.

(3) Option type includes:

A - Fixed base price.

B - Fixed capitalization rate on lease revenue.

(4) Based on annualized cash revenue for contracts in place as of June 30, 2023.

(5) Option window is open until the expiration of the lease term.

(6) Option window is open for six months from the option period open date.

(7) Purchase option reflects two option types.

(8) Includes one property classified as held for sale as of June 30, 2023.

Schedule Of Rental Income

The following table summarizes components of the Company’s rental income (dollars in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Rental Income	2023		2022		2023		2022
Contractual rent due(1)	$	47,752	$	46,801	$	93,922	$	93,779
Straight-line rent	(7)		5		(14)		11
Adjustment for collectibility(2)	—		—		—		(977)


Total	$	47,745	$	46,806	$	93,908	$	92,813

Schedule of Recent Real Estate Acquisitions

The following table summarizes the Company’s acquisitions for the six months ended June 30, 2023 (dollars in thousands):


Type of Property	Purchase Price(1)		Initial Annual Cash Rent(2)		Number of Properties	Number of Beds/Units(3)
Skilled nursing	$	107,858	$	9,085	7	871
Multi-service campuses	25,276		1,916		1	168
Assisted living	39,319		3,495		4	241
Total	$	172,453	$	14,496	12	1,280

(1) Purchase price includes capitalized acquisition costs.

(2) Initial annual cash rent represents initial cash rent for the first twelve months excluding the impact of rent abatement in the first one to three months, if applicable.

(3) The number of beds/units includes operating beds at the acquisition date.

IMPAIRMENT OF REAL ESTATE INVESTMENTS, ASSETS HELD FOR SALE, NET AND ASSET SALES - (Tables)

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Asset Sales and Held for Sale Reclassifications

The following table summarizes the Company’s dispositions for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Number of facilities	3		—		4		1
Net sales proceeds(1)	$	13,234	$	—	$	16,464	$	959
Net carrying value	11,206		—		14,506		773
Net gain on sale	$	2,028	$	—	$	1,958	$	186

The following table summarizes the Company’s assets held for sale activity for the periods presented (dollars in thousands):


	Net Carrying Value		Number of Facilities
December 31, 2022	$	12,291	5
Additions to assets held for sale	47,047		14
Assets sold	(14,506)		(4)
Impairment of real estate held for sale	(23,278)		—

June 30, 2023	$	21,554	15

OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2023

Investments, All Other Investments [Abstract]

Schedule of Other Real Estate Related Investments, at Fair Value

As of June 30, 2023 and December 31, 2022, the Company’s other real estate related investments, at fair value, consisted of the following (dollar amounts in thousands):


								As of June 30, 2023
Investment	Facility Count and Type	Principal Balance as of June 30, 2023		Book Value as of June 30, 2023		Book Value as of December 31, 2022		Weighted Average Contractual Interest Rate			Maturity Date
Senior mortgage secured loan receivable	18 SNF/Campus	$	75,000	$	71,488	$	72,543	8.4	%	(1)	6/30/2027
Mortgage secured loan receivable	5 SNF	22,250		21,208		21,345		10.6	%	(2)	8/1/2025
Mortgage secured loan receivable	4 SNF	24,900		23,503		23,796		9.0	%	(2)	9/8/2025
Mortgage secured loan receivable(3)	1 ALF	2,000		2,000		—		9.0	%		5/31/2024
Mortgage secured loan receivable(4)	2 SNF Campus / ILF	25,993		25,993		—		9.0	%		6/29/2033
Mezzanine loan receivable(5)	9 SNF	—		—		14,672		—			—
Mezzanine loan receivable	18 SNF/Campus	25,000		22,630		24,012		11.0	%		6/30/2032
		$	175,143	$	166,822	$	156,368

(1) Rate is net of subservicing fee.

(2) Term secured overnight financing rate (“SOFR”) used as of June 30, 2023 was 5.11%. Rates are net of subservicing fees.

(5) Mezzanine loan was prepaid during the six months ended June 30, 2023.

Schedule of Other Real Estate Related Investment Activity

The following table summarizes the Company’s other real estate related investments activity for the six months ended June 30, 2023 and 2022 (dollars in thousands):


	Six Months Ended June 30,
	2023		2022
Origination of other real estate related investments	$	28,243	$	100,000
Accrued interest, net	(184)		13
Unrealized losses on other real estate related investments, net	(2,605)		—
Repayments of other real estate related investments	(15,000)		—
Net increase in other real estate related investments, at fair value	$	10,454	$	100,013


							As of June 30, 2023
Investment	Principal Balance as of June 30, 2023		Book Value as of June 30, 2023		Book Value as of December 31, 2022		Weighted Average Contractual Interest Rate		Maturity Date
Other loans receivable	$	10,328	$	10,333	$	9,600	8.5	%	8/31/2023 - 9/30/2025
Expected credit loss	—		(2,094)		(2,094)
Total	$	10,328	$	8,239	$	7,506

Schedule of Loan Receivable Activity

The following table summarizes the Company’s other loans receivable activity for the six months ended June 30, 2023 and 2022 (dollars in thousands):


	Six Months Ended June 30,
	2023		2022
Origination of loans receivable	$	1,019	$	2,500
Principal payments	(287)		(276)
Accrued interest, net	1		(2)
Provision for loan losses, net	—		(4,594)

Net increase (decrease) in other loans receivable	$	733	$	(2,372)

Schedule of Interest and Other Income


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Investment	2023		2022		2023		2022
Mortgage secured loans receivable	$	2,762	$	17	$	5,466	$	17
Mezzanine loans receivable	695		713		2,278		1,163


Other	351		17		507		36
Total	$	3,808	$	747	$	8,251	$	1,216

FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Items Measured at Fair Value on a Recurring Basis


	Level 1		Level 2		Level 3		Balance as of June 30, 2023
Assets:
Mortgage secured loans receivable	$	—	$	—	$	144,192	$	144,192
Mezzanine loans receivable	—		—		22,630		22,630
Total	$	—	$	—	$	166,822	$	166,822


	Level 1		Level 2		Level 3		Balance as of December 31, 2022
Assets:
Mortgage secured loans receivable	$	—	$	—	$	117,684	$	117,684
Mezzanine loans receivable	—		—		38,684		38,684
Total	$	—	$	—	$	156,368	$	156,368

Schedule of Assets Measured at Fair Value on a Recurring Basis Using Level 3 Inputs

The following table details the Company’s assets measured at fair value on a recurring basis using Level 3 inputs (dollars in thousands):


	Investments in Real Estate Secured Loans		Investments in Mezzanine Loans
Balance at December 31, 2022	$	117,684	$	38,684
Loan originations	28,243		—
Accrued interest, net	(21)		(163)
Unrealized losses on other real estate related investments, net	(1,714)		(891)
Repayments	—		(15,000)
Balance as of June 30, 2023	$	144,192	$	22,630

Schedule of Quantitative Information About Unobservable Inputs Related To Level 3 Fair Value Measurements

Type

Book Value as of June 30, 2023

Valuation Technique

Unobservable Inputs

Range

Mortgage secured loans receivable

144,192

Discounted cash flow

Discount Rate

10% - 14%

Mezzanine loan receivable

22,630

Discounted cash flow

Discount Rate

12% - 14%

Schedule of Face Value, Carrying Amount and Fair Value of Financial Instruments

A summary of the face value, carrying amount and fair value of the Notes (as defined in Note 7, Debt, below) as of June 30, 2023 and December 31, 2022 using Level 2 inputs is as follows (dollars in thousands):


		June 30, 2023						December 31, 2022
	Level	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value



Financial liabilities:
Senior unsecured notes payable	2	$	400,000	$	395,594	$	346,588	$	400,000	$	395,150	$	345,036

DEBT (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of Debt Instruments

The following table summarizes the balance of the Company’s indebtedness as of June 30, 2023 and December 31, 2022 (dollars in thousands):


	June 30, 2023						December 31, 2022
	Principal Amount		Deferred Loan Fees		Carrying Value		Principal Amount		Deferred Loan Fees		Carrying Value
Senior unsecured notes payable	$	400,000	$	(4,406)	$	395,594	$	400,000	$	(4,850)	$	395,150
Senior unsecured term loan	200,000		(546)		199,454		200,000		(652)		199,348
Unsecured revolving credit facility	280,000		—		280,000		125,000		—		125,000
	$	880,000	$	(4,952)	$	875,048	$	725,000	$	(5,502)	$	719,498

EQUITY (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of Dividends on Common Stock

The following table summarizes the cash dividends per share of common stock declared by the Company’s board of directors for the first six months of 2023 (dollars in thousands, except per share amounts):


	For the Three Months Ended
	March 31, 2023		June 30, 2023
Dividends declared per share	$	0.28	$	0.28
Dividends payment date	April 14, 2023		July 14, 2023
Dividends payable as of record date(1)	$	27,846	$	27,853
Dividends record date	March 31, 2023		June 30, 2023

(1) Dividends payable includes dividends on performance stock awards that will be paid if and when the shares subject to such awards vest if deemed probable of meeting their performance condition.

STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Restricted Stock Award and Performance Award Activity

The following table summarizes the status of the restricted stock award and performance award activity for the six months ended June 30, 2023:


	Shares	Weighted Average Share Price
Unvested balance at December 31, 2022	573,609	$	20.63
Granted:


Board Awards	24,768	19.38
Vested	(185,767)	20.94
Forfeited	(61,680)	21.19
Unvested balance at June 30, 2023	350,930	$	20.28

Schedule of Stock-Based Compensation Expense

The following table summarizes the stock-based compensation expense recognized for the periods presented (dollars in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Stock-based compensation expense	$	924	$	1,394	$	1,860	$	2,915

(LOSS) EARNINGS PER COMMON SHARE (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Schedule of Reconciliation of Weighted-Average Common Shares Outstanding Used in Calculation of Basic EPS to Diluted EPS


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net (loss) income	$	(484)	$	20,669	$	18,743	$	(22,595)
Less: Net income allocated to participating securities	(89)		(94)		(178)		(211)
Numerator for basic and diluted earnings available to common stockholders	$	(573)	$	20,575	$	18,565	$	(22,806)
Denominator:
Weighted-average basic common shares outstanding	99,117		96,564		99,090		96,487
Dilutive potential common shares - performance stock awards	—		34		90		—
Dilutive potential common shares - forward equity agreements	—		—		14		—
Weighted-average diluted common shares outstanding	99,117		96,598		99,194		96,487

(Loss) earnings per common share, basic	$	(0.01)	$	0.21	$	0.19	$	(0.24)
(Loss) earnings per common share, diluted	$	(0.01)	$	0.21	$	0.19	$	(0.24)
Antidilutive unvested restricted stock awards, total shareholder return units, performance awards, and forward equity shares excluded from the computation	500		341		316		431

CONCENTRATION OF RISK (Tables)

6 Months Ended

Jun. 30, 2023

Risks and Uncertainties [Abstract]

Schedules of Concentration of Risk


	Number of Facilities			Number of Beds/Units			Percentage of Total Revenue(1)
Operator	SNF	Campus	ALF/ILF	SNF	Campus	ALF/ILF	Three Months Ended		Six Months Ended
June 30, 2023
Ensign(2)	83	8	7	8,741	997	661	36	%	36	%
Priority Management Group	13	2	—	1,742	402	—	16	%	16	%

June 30, 2022
Ensign(2)	83	8	7	8,756	997	678	35	%	35	%
Priority Management Group	13	2	—	1,742	402	—	16	%	16	%

(1) The Company’s rental income, exclusive of operating expense reimbursements and adjustments for collectibility.


	Number of Facilities			Number of Beds/Units			Percentage of Total Revenue(1)
State	SNF	Campus	ALF/ILF	SNF	Campus	ALF/ILF	Three Months Ended		Six Months Ended
June 30, 2023
CA	29	9	5	3,307	1,527	437	28	%	28	%
TX	40	3	2	5,126	536	212	23	%	23	%

June 30, 2022
CA	27	8	5	3,048	1,359	449	27	%	26	%
TX	38	3	3	4,849	536	242	22	%	22	%

(1) Represents the Company’s rental income, exclusive of operating expense reimbursements and adjustments for collectibility.

ORGANIZATION (Details) $ in Thousands	6 Months Ended
ORGANIZATION (Details) $ in Thousands	Jun. 30, 2023 USD ($) facility state bed loan	Dec. 31, 2022 USD ($)
Real Estate Properties [Line Items]
Number of facilities \| facility	1
Number of states with properties \| state	28
Aggregate carrying value \| $	$ 166,822	$ 156,368
Mortgage secured loans receivable
Real Estate Properties [Line Items]
Number of loans \| loan	5
Mezzanine Loan Receivable
Real Estate Properties [Line Items]
Number of loans \| loan	1
Skilled Nursing, Multi Service Campuses, Assisted Living, and Independent Living Facilities
Real Estate Properties [Line Items]
Number of facilities \| facility	224
Number of operational beds and units in facilities \| bed	23,694

REAL ESTATE INVESTMENTS, NET - Schedule of Investment in Owned Properties (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Real Estate [Abstract]
Land	$ 266,010	$ 238,738
Buildings and improvements	1,575,661	1,483,133
Integral equipment, furniture and fixtures	97,755	97,199
Identified intangible assets	2,832	2,832
Real estate investments	1,942,258	1,821,902
Accumulated depreciation and amortization	(414,024)	(400,492)
Real estate investments, net	$ 1,528,234	$ 1,421,410

REAL ESTATE INVESTMENTS, NET - Narrative (Details)	Jun. 30, 2023 facility
Real Estate [Line Items]
Number of facilities	1
Held for sale
Real Estate [Line Items]
Number of facilities	15
Skilled nursing, multi-service campuses, assisted living and independent living facilities
Real Estate [Line Items]
Number of facilities	224
Skilled nursing, multi-service campuses, assisted living and independent living facilities \| Held for sale
Real Estate [Line Items]
Number of facilities	15
Skilled nursing, multi-service campuses, assisted living and independent living facilities \| Short-term lease
Real Estate [Line Items]
Number of facilities	2
Skilled nursing, multi-service campuses, assisted living and independent living facilities \| Triple-net Leases \| Various other operators
Real Estate [Line Items]
Number of facilities	222

REAL ESTATE INVESTMENTS, NET - Schedule of Total Future Contractual Minimum Rental Income (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Future Contractual Minimum Rental Income
2023 (six months)	$ 98,155
2024	197,155
2025	198,310
2026	198,853
2027	195,687
2028	193,433
Thereafter	941,966
Total	$ 2,023,559

REAL ESTATE INVESTMENTS, NET - Schedule Of Tenant Purchase Options (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($) property facility
Lessor, Lease, Description [Line Items]
Period of option window	6 months
Disposal Group, Held-for-sale, Not Discontinued Operations
Lessor, Lease, Description [Line Items]
Properties \| property	1
SNF \| Lease Expiration March 2029, Next option 2022
Lessor, Lease, Description [Line Items]
Properties \| property	1
Current Cash Rent \| $	$ 832
SNF \| Lease Expiration November 2034, Next option 2024
Lessor, Lease, Description [Line Items]
Properties \| property	4
Current Cash Rent \| $	$ 3,891
SNF \| Properties With Purchase Option, Current Cash Rent
Lessor, Lease, Description [Line Items]
Properties \| facility	11
Current Cash Rent \| $	$ 5,100
SNF / Campus \| Lease Expiration October 2032, Next option 2024
Lessor, Lease, Description [Line Items]
Properties \| property	2
Current Cash Rent \| $	$ 1,097

REAL ESTATE INVESTMENTS, NET - Schedule Of Rental Income (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($) operator
Rental Income
Contractual rent due	$ 47,752	$ 46,801	$ 93,922	$ 93,779
Straight-line rent	(7)	5	(14)	11
Adjustments for collectibility	0	0	0	(977)
Total	47,745	46,806	93,908	92,813
Tenant operating expense reimbursement	$ 1,200	$ 700	$ 1,900	$ 1,300
Number of existing and former operators with doubtful collectability \| operator				4
Operating Expense Reimbursements
Rental Income
Adjustments for collectability, reversed				$ 700
Contractual Rent
Rental Income
Adjustments for collectability, reversed				200
Straight-Line Rent
Rental Income
Adjustments for collectability, reversed				$ 100

REAL ESTATE INVESTMENTS, NET - Schedule of Real Estate Acquisitions (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($) property bed
Business Acquisition [Line Items]
Purchase Price	$ 172,453
Initial Annual Cash Rent	$ 14,496
Number of Properties \| property	12
Number of Beds/Units \| bed	1,280
Skilled nursing
Business Acquisition [Line Items]
Purchase Price	$ 107,858
Initial Annual Cash Rent	$ 9,085
Number of Properties \| property	7
Number of Beds/Units \| bed	871
Multi-service campuses
Business Acquisition [Line Items]
Purchase Price	$ 25,276
Initial Annual Cash Rent	$ 1,916
Number of Properties \| property	1
Number of Beds/Units \| bed	168
Assisted living
Business Acquisition [Line Items]
Purchase Price	$ 39,319
Initial Annual Cash Rent	$ 3,495
Number of Properties \| property	4
Number of Beds/Units \| bed	241

REAL ESTATE INVESTMENTS, NET - Lease Amendments Narrative (Details) $ in Millions	Apr. 01, 2023 USD ($) facility renewal_option	Mar. 24, 2023 USD ($) renewal_option	Mar. 16, 2023 USD ($) renewal_option facility	Mar. 15, 2023 USD ($)	Jan. 01, 2023 USD ($) renewal_option
Amended Premier Lease
Real Estate [Line Items]
Annual cash rent decrease under amended lease					$ 1.7
Annual cash rent under amended lease					$ 2.6
Initial lease term (in years)					8 years
Number of renewal options \| renewal_option					2
Lease renewal term (in years)					5 years
Noble VA Lease Termination And New Pennant Lease
Real Estate [Line Items]
Annual cash rent under amended lease			$ 0.8	$ 2.3
Initial lease term (in years)			15 years
Number of renewal options \| renewal_option			2
Lease renewal term (in years)			5 years
Amended Hillstone Lease
Real Estate [Line Items]
Initial lease term (in years)		7 years
Number of renewal options \| renewal_option		2
Lease renewal term (in years)		5 years
Deferred rent		$ 0.7
Period of deferral		12 months
Percentage of fixed rent escalator		2.00%
Amended Momentum Lease
Real Estate [Line Items]
Annual cash rent increase under amended lease	$ 1.0
Initial lease term (in years)	15 years
Number of renewal options \| renewal_option	2
Lease renewal term (in years)	5 years
Assisted living
Real Estate [Line Items]
Leases with terminated operations \| facility			2
Number of properties included \| facility			2
Skilled nursing facility
Real Estate [Line Items]
Number of properties included \| facility	1
Skilled nursing facility \| Amended Momentum Lease
Real Estate [Line Items]
Number of facilities acquired \| facility	1

IMPAIRMENT OF REAL ESTATE INVESTMENTS, ASSETS HELD FOR SALE, NET AND ASSET SALES - Narrative (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) facility	Jun. 30, 2022 USD ($) facility	Jun. 30, 2023 USD ($) facility	Jun. 30, 2022 USD ($) facility
Real Estate [Line Items]
Number of facilities	1		1
Minimum \| Level 3 \| Valuation, Market Approach
Real Estate [Line Items]
Prices per unit input \| $	$ 18		$ 18
Maximum \| Level 3 \| Valuation, Market Approach
Real Estate [Line Items]
Prices per unit input \| $	35		35
Weighted average \| Level 3 \| Valuation, Market Approach
Real Estate [Line Items]
Prices per unit input \| $	$ 21		$ 21
Held for sale
Real Estate [Line Items]
Number of facilities	15		15
Impairment expense to reduce carrying value to fair value less costs to sell \| $	$ 21,400	$ 1,700	$ 23,300	$ 61,400
Held for sale \| Minimum
Real Estate [Line Items]
Number of facilities	12		12
Number of properties impaired		1		1
Held for sale \| Maximum
Real Estate [Line Items]
Number of facilities	15		15
Number of properties impaired		21		21

IMPAIRMENT OF REAL ESTATE INVESTMENTS, ASSETS HELD FOR SALE, NET AND ASSET SALES - Schedule of Company's Dispositions (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) facility	Jun. 30, 2022 USD ($) facility	Jun. 30, 2023 USD ($) facility	Jun. 30, 2022 USD ($) facility	Dec. 31, 2022 facility
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net sales proceeds			$ 14,464	$ 959
Net gain on sale	$ 2,028	$ 0	$ 1,958	$ 186
Number of facilities \| facility	1		1
Principal amount	$ 175,143		$ 175,143
Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of facilities \| facility	3	0	4	1
Net sales proceeds	$ 13,234	$ 0	$ 16,464	$ 959
Net carrying value	11,206	0	14,506	773
Net gain on sale	$ 2,028	$ 0	$ 1,958	$ 186
Disposed of by sale \| Assisted Living Facilities
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of facilities \| facility	1		1
Disposal Group, Held-for-sale, Not Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of facilities \| facility	15		15		5
Disposal Group, Held-for-sale, Not Discontinued Operations \| Assisted Living Facilities
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Principal amount	$ 2,000		$ 2,000

IMPAIRMENT OF REAL ESTATE INVESTMENTS, ASSETS HELD FOR SALE, NET AND ASSET SALES - Company's Assets Held for Sale Activity (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($) facility
Increase Decrease in Assets Held for Sale [Roll Forward]
Beginning balance, at cost	$ 1,821,902
Ending balance, at cost	$ 1,942,258
Number of facilities at end \| facility	1
Disposal Group, Held-for-sale, Not Discontinued Operations
Increase Decrease in Assets Held for Sale [Roll Forward]
Beginning balance, at cost	$ 12,291
Additions to assets held for sale	47,047
Assets sold	(14,506)
Impairment of real estate held for sale	(23,278)
Ending balance, at cost	$ 21,554
Number of facilities at beginning \| facility	5
Number of facilities, Additions to assets held for sale \| facility	14
Number of facilities, Assets sold \| facility	(4)
Number of facilities, Impairment of real estate held for sale \| facility	0
Number of facilities at end \| facility	15

OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS - Other Real Estate Related Investments, at Fair Value (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($) property facility	Dec. 31, 2022 USD ($) facility
Real Estate Properties [Line Items]
Principal amount	$ 175,143
Book Value	$ 166,822	$ 156,368
Number of facilities \| facility	1
Senior mortgage secured loan receivable
Real Estate Properties [Line Items]
Principal amount	$ 75,000
Book Value	$ 71,488	$ 72,543
Weighted Average Contractual Interest Rate	8.40%
Senior mortgage secured loan receivable \| Skilled nursing and campus facilities
Real Estate Properties [Line Items]
Facility Count and Type \| facility	18	18
Mortgage secured loan receivable
Real Estate Properties [Line Items]
Principal amount	$ 22,250
Book Value	$ 21,208	$ 21,345
Weighted Average Contractual Interest Rate	10.60%
Mortgage secured loan receivable \| Skilled nursing facility
Real Estate Properties [Line Items]
Facility Count and Type \| facility	5	5
Mortgage secured loan receivable \| SOFR
Real Estate Properties [Line Items]
Basis spread on variable rate (percent)	5.11%
Mortgage secured loan receivable
Real Estate Properties [Line Items]
Principal amount	$ 24,900
Book Value	$ 23,503	$ 23,796
Weighted Average Contractual Interest Rate	9.00%
Mortgage secured loan receivable \| Skilled nursing facility
Real Estate Properties [Line Items]
Facility Count and Type \| facility	4	4
Mortgage secured loan receivable
Real Estate Properties [Line Items]
Principal amount	$ 2,000
Book Value	$ 2,000	$ 0
Weighted Average Contractual Interest Rate	9.00%
Extension option, term (year)	1 year
Mortgage secured loan receivable \| Assisted Living Facilities
Real Estate Properties [Line Items]
Facility Count and Type \| facility	1	1
Principal amount	$ 2,000
Mortgage secured loan receivable
Real Estate Properties [Line Items]
Principal amount	25,993
Book Value	$ 25,993	$ 0
Weighted Average Contractual Interest Rate	9.00%
Mortgage secured loan receivable \| Skilled nursing and campus facilities
Real Estate Properties [Line Items]
Facility Count and Type \| facility	2	2
Mortgage secured loan receivable \| Skilled nursing facility
Real Estate Properties [Line Items]
Principal amount	$ 26,000
Number of facilities \| property	1
Mortgage secured loan receivable \| Skilled nursing facility \| Minimum
Real Estate Properties [Line Items]
Early termination fee	0.00%
Mortgage secured loan receivable \| Skilled nursing facility \| Maximum
Real Estate Properties [Line Items]
Early termination fee	3.00%
Mortgage secured loan receivable \| Assisted and Independent Living Properties
Real Estate Properties [Line Items]
Number of facilities \| property	1
Mezzanine loans receivable
Real Estate Properties [Line Items]
Principal amount	$ 0
Book Value	$ 0	$ 14,672
Weighted Average Contractual Interest Rate	0.00%
Mezzanine loans receivable \| Skilled nursing facility
Real Estate Properties [Line Items]
Facility Count and Type \| facility	9	9
Mezzanine loan receivable
Real Estate Properties [Line Items]
Principal amount	$ 25,000
Book Value	$ 22,630	$ 24,012
Weighted Average Contractual Interest Rate	11.00%
Mezzanine loan receivable \| Skilled nursing and campus facilities
Real Estate Properties [Line Items]
Facility Count and Type \| facility	18	18
Other
Real Estate Properties [Line Items]
Principal amount	$ 10,328
Book Value	$ 10,333	$ 9,600
Weighted Average Contractual Interest Rate	8.50%
Expected credit loss	$ (2,094)	(2,094)
Principal Balance	10,328
Net increase in other real estate related investments, at fair value	$ 8,239	$ 7,506

OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS - Other Real Estate Related Investment Activity (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Financing Receivable, Allowance for Credit Loss [Line Items]
Origination of other real estate related investments	$ 175,143
Net increase (decrease) in other loans receivable	733	$ (2,372)
Other Real Estate Related Investments
Financing Receivable, Allowance for Credit Loss [Line Items]
Origination of other real estate related investments	28,243	100,000
Accrued interest, net	(184)	13
Unrealized losses on other real estate related investments, net	(2,605)	0
Repayments of other real estate related investments	(15,000)	0
Net increase (decrease) in other loans receivable	$ 10,454	$ 100,013

OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS - Schedule of Loan Receivable Activity (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Investments, All Other Investments [Abstract]
Origination of loans receivable	$ 1,019	$ 2,500
Principal payments	(287)	(276)
Accrued interest, net	1	(2)
Provision for loan losses, net	0	(4,594)
Net increase (decrease) in other loans receivable	$ 733	$ (2,372)

OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS - Narrative (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($) loan
Financing Receivable, Allowance for Credit Loss [Line Items]
Provision for loan losses, net	$ 0	$ 0	$ 0	$ 3,844,000
Other
Financing Receivable, Allowance for Credit Loss [Line Items]
Provision for loan losses, net			$ 0	$ 4,600,000
Number of loans receivable with provision \| loan				2
Unfunded loan commitment				$ 400,000
Loan loss recovery				$ 800,000

OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS - Schedule of Interest and Other Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Real Estate Properties [Line Items]
Interest and other income	$ 3,808	$ 747	$ 8,251	$ 1,216
Mortgage secured loans receivable
Real Estate Properties [Line Items]
Interest and other income	2,762	17	5,466	17
Mezzanine loans receivable
Real Estate Properties [Line Items]
Interest and other income	695	713	2,278	1,163
Other
Real Estate Properties [Line Items]
Interest and other income	$ 351	$ 17	$ 507	$ 36

FAIR VALUE MEASUREMENTS - Schedule of Items Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Mortgage Secured and Mezzanine Loans Receivable
Assets:
Loan receivable	$ 166,822	$ 156,368
Recurring \| Mortgage secured loans receivable
Assets:
Loan receivable	144,192	117,684
Recurring \| Mezzanine Loan Receivable
Assets:
Loan receivable	22,630	38,684
Recurring \| Level 1 \| Mortgage Secured and Mezzanine Loans Receivable
Assets:
Loan receivable	0	0
Recurring \| Level 1 \| Mortgage secured loans receivable
Assets:
Loan receivable	0	0
Recurring \| Level 1 \| Mezzanine Loan Receivable
Assets:
Loan receivable	0	0
Recurring \| Level 2 \| Mortgage Secured and Mezzanine Loans Receivable
Assets:
Loan receivable	0	0
Recurring \| Level 2 \| Mortgage secured loans receivable
Assets:
Loan receivable	0	0
Recurring \| Level 2 \| Mezzanine Loan Receivable
Assets:
Loan receivable	0	0
Recurring \| Level 3 \| Mortgage Secured and Mezzanine Loans Receivable
Assets:
Loan receivable	166,822	156,368
Recurring \| Level 3 \| Mortgage secured loans receivable
Assets:
Loan receivable	144,192	117,684
Recurring \| Level 3 \| Mezzanine Loan Receivable
Assets:
Loan receivable	$ 22,630	$ 38,684

FAIR VALUE MEASUREMENTS - Schedule of Assets Measured at Fair Value on a Recurring Basis Using Level 3 Inputs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Unrealized losses on other real estate related investments, net	$ (2,151)	$ 0	$ (2,605)	$ 0
Investments in Real Estate Secured Loans
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of period			117,684
Loan originations			28,243
Accrued interest, net			(21)
Unrealized losses on other real estate related investments, net			(1,714)
Repayments			0
Balance at end of period	144,192		144,192
Investments in Mezzanine Loans
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of period			38,684
Loan originations			0
Accrued interest, net			(163)
Unrealized losses on other real estate related investments, net			(891)
Repayments			(15,000)
Balance at end of period	$ 22,630		$ 22,630

FAIR VALUE MEASUREMENTS - Narrative (Details)	3 Months Ended		6 Months Ended
FAIR VALUE MEASUREMENTS - Narrative (Details)	Jun. 30, 2023 USD ($) loan	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) loan	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Financing Receivable, Past Due [Line Items]
Unrealized losses on other real estate related investments, net	$ 2,151,000	$ 0	$ 2,605,000	$ 0
Mortgage loan receivable	166,822,000		166,822,000		$ 156,368,000
Greater than 90 days past due
Financing Receivable, Past Due [Line Items]
Mortgage loan receivable	0		0		$ 0
Secured And Mezzanine Loans Receivable
Financing Receivable, Past Due [Line Items]
Unrealized losses on other real estate related investments, net	1,900,000		2,800,000
Unrealized loss on origination fee paid	$ 300,000
Partial offset loss			$ 500,000
Real Estate Secured And Mortgage Loans Receivable
Financing Receivable, Past Due [Line Items]
Number of loans \| loan	3		3
Real estate secured and mezzanine loans receivable
Financing Receivable, Past Due [Line Items]
Number of loans \| loan	1		1

FAIR VALUE MEASUREMENTS - Schedule of Quantitative Information About Unobservable Inputs Related To Level 3 Fair Value Measurements (Details) - Level 3 - Discount Rate - Discounted cash flow $ in Thousands	Jun. 30, 2023 USD ($)
Mortgage secured loans receivable
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Loans receivable, book value	$ 144,192
Mortgage secured loans receivable \| Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Loans receivable, measurement input	0.10
Mortgage secured loans receivable \| Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Loans receivable, measurement input	0.14
Mezzanine Loan Receivable
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Loans receivable, book value	$ 22,630
Mezzanine Loan Receivable \| Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Loans receivable, measurement input	0.12
Mezzanine Loan Receivable \| Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Loans receivable, measurement input	0.14

FAIR VALUE MEASUREMENTS - Schedule of Face Value, Carrying Amount and Fair Value of Financial Instruments (Details) - Level 2 - Senior unsecured notes payable - Senior unsecured notes payable - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Financial liabilities:
Face Value	$ 400,000	$ 400,000
Carrying Amount
Financial liabilities:
Notes payable, fair value disclosure	395,594	395,150
Fair Value
Financial liabilities:
Notes payable, fair value disclosure	$ 346,588	$ 345,036

DEBT - Schedule of Debt Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Principal Amount	$ 880,000	$ 725,000
Deferred Loan Fees	(4,952)	(5,502)
Carrying Value	875,048	719,498
Unsecured revolving credit facility
Debt Instrument [Line Items]
Principal Amount	280,000	125,000
Deferred Loan Fees	0	0
Carrying Value	280,000	125,000
Notes payable \| Senior unsecured notes payable
Debt Instrument [Line Items]
Principal Amount	400,000	400,000
Deferred Loan Fees	(4,406)	(4,850)
Carrying Value	395,594	395,150
Term loan \| Senior unsecured term loan
Debt Instrument [Line Items]
Principal Amount	200,000	200,000
Deferred Loan Fees	(546)	(652)
Carrying Value	$ 199,454	$ 199,348

DEBT - Senior Unsecured Notes Payable Narrative (Details) - Notes payable - 2028 Senior Notes	Jun. 17, 2021 USD ($)
Debt Instrument [Line Items]
Debt instrument face amount	$ 400,000,000
Interest rate (as percent)	3.875%
Gross proceeds from issuance	$ 400,000,000
Net proceeds from issuance	$ 393,800,000
Redemption price, percentage upon change of control (as percent)	101.00%
Period prior to March 30 2028
Debt Instrument [Line Items]
Redemption price of notes (as percent)	100.00%
Period after March 30 2028
Debt Instrument [Line Items]
Redemption price of notes (as percent)	100.00%
Period prior to June 30 2024
Debt Instrument [Line Items]
Redemption price of notes (as percent)	103.875%
Percentage of principal amount (as percent)	40.00%

DEBT - Unsecured Revolving Credit Facility and Term Loan Narrative (Details)	Feb. 08, 2019 USD ($) extension_option	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Line of Credit Facility [Line Items]
Outstanding amounts		$ 880,000,000	$ 725,000,000
Borrowings outstanding		280,000,000	125,000,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Credit facility borrowing capacity	$ 600,000,000
Outstanding amounts		280,000,000	125,000,000
Borrowings outstanding		280,000,000
Number of extension options \| extension_option	2
Extension option term (in months)	6 months
Revolving Credit Facility \| Minimum
Line of Credit Facility [Line Items]
Facility fee on revolving commitment fees (as percent)	0.15%
Facility fee on revolving commitment fee based on investment grade ratings (as percent)	0.125%
Revolving Credit Facility \| Minimum \| Base Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate (as percent)	0.10%
Revolving Credit Facility \| Minimum \| Secured Overnight Financing Rate (SOFR)
Line of Credit Facility [Line Items]
Basis spread on variable rate (as percent)	1.10%
Revolving Credit Facility \| Maximum
Line of Credit Facility [Line Items]
Facility fee on revolving commitment fees (as percent)	0.35%
Facility fee on revolving commitment fee based on investment grade ratings (as percent)	0.30%
Revolving Credit Facility \| Maximum \| Base Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate (as percent)	0.55%
Revolving Credit Facility \| Maximum \| Secured Overnight Financing Rate (SOFR)
Line of Credit Facility [Line Items]
Basis spread on variable rate (as percent)	1.55%
Letter of credit
Line of Credit Facility [Line Items]
Subfacility capacity as percentage of available revolving commitments (as percent)	10.00%
Swingline loan
Line of Credit Facility [Line Items]
Subfacility capacity as percentage of available revolving commitments (as percent)	10.00%
Term loan \| Senior unsecured term loan
Line of Credit Facility [Line Items]
Debt instrument face amount	$ 200,000,000
Outstanding amounts		$ 200,000,000	$ 200,000,000
Term loan \| Senior unsecured term loan \| Minimum \| Base Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate (as percent)	0.50%
Term loan \| Senior unsecured term loan \| Minimum \| Secured Overnight Financing Rate (SOFR)
Line of Credit Facility [Line Items]
Basis spread on variable rate (as percent)	1.50%
Term loan \| Senior unsecured term loan \| Maximum \| Base Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate (as percent)	1.20%
Term loan \| Senior unsecured term loan \| Maximum \| Secured Overnight Financing Rate (SOFR)
Line of Credit Facility [Line Items]
Basis spread on variable rate (as percent)	2.20%

EQUITY - Narrative (Details) - ATM Program - USD ($)	3 Months Ended		6 Months Ended
EQUITY - Narrative (Details) - ATM Program - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Feb. 24, 2023
Class of Stock [Line Items]
Number of shares (in shares)	6,736,089		6,736,089
Share price (in usd per share)	$ 19.71		$ 19.71
Issuance of common stock, net (in shares)		0		0
Remaining offering amount available	$ 367,200,000		$ 367,200,000
Maximum
Class of Stock [Line Items]
Authorized aggregate offering price of common stock					$ 500,000,000

EQUITY - Schedule of Dividends on Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022
Dividends on common stock
Dividends declared per share (in usd per share)	$ 0.28	$ 0.28	$ 0.275	$ 0.275
Dividends payment date	Jul. 14, 2023	Apr. 14, 2023
Dividends payable as of record date	$ 27,853	$ 27,846
Dividends record date	Jun. 30, 2023	Mar. 31, 2023

STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized for awards (in shares)	5,000,000	5,000,000
Value of forfeited stock awards		$ 0.9
Unamortized stock-based compensation expense	$ 7.2	$ 7.2
RSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)			3 years	3 years	4 years
RSAs \| Board of Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)		1 year
Performance Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Value of forfeited stock awards	$ 0.6	$ 0.6
Performance Stock Awards \| Minimum \| Vesting Period One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)				1 year
Performance Stock Awards \| Minimum \| Vesting Period Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)					1 year
Performance Stock Awards \| Maximum \| Vesting Period One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)				3 years
Performance Stock Awards \| Maximum \| Vesting Period Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)					4 years
Performance Shares T S R Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)			3 years	3 years
Performance Shares T S R Units \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of original awards granted, TSR		0.00%
Performance Shares T S R Units \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of original awards granted, TSR		200.00%
RSAs and PSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average remaining vesting period (in years)		1 year 8 months 12 days

STOCK-BASED COMPENSATION - Schedule of Restricted Stock Award and Performance Award Activity (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Shares
Unvested, beginning balance (in shares) \| shares	573,609
Vested (in shares) \| shares	(185,767)
Forfeited (in shares) \| shares	(61,680)
Unvested, ending balance (in shares) \| shares	350,930
Weighted Average Share Price
Unvested, beginning balance (in usd per share) \| $ / shares	$ 20.63
Vested (in usd per share) \| $ / shares	20.94
Forfeited (in usd per share) \| $ / shares	21.19
Unvested, ending balance (in usd per share) \| $ / shares	$ 20.28
Board Awards
Shares
Granted (in shares) \| shares	24,768
Weighted Average Share Price
Granted (in usd per share) \| $ / shares	$ 19.38

STOCK-BASED COMPENSATION - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-Based Payment Arrangement [Abstract]
Stock-based compensation expense	$ 924	$ 1,394	$ 1,860	$ 2,915

(LOSS) EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerator:
Net (loss) income	$ (484)	$ 19,227	$ 20,669	$ (43,264)	$ 18,743	$ (22,595)
Less: Net income allocated to participating securities	(89)		(94)		(178)	(211)
Numerator for basic earnings available to common stockholders	(573)		20,575		18,565	(22,806)
Numerator for diluted earnings available to common stockholders	$ (573)		$ 20,575		$ 18,565	$ (22,806)
Denominator:
Weighted-average basic common shares outstanding (in shares)	99,117		96,564		99,090	96,487
Weighted-average diluted common shares outstanding (in shares)	99,117		96,598		99,194	96,487
(Loss) earnings per common share, basic (in usd per share)	$ (0.01)		$ 0.21		$ 0.19	$ (0.24)
(Loss) earnings per common share, diluted (in usd per share)	$ (0.01)		$ 0.21		$ 0.19	$ (0.24)
Antidilutive unvested restricted stock awards, total shareholder return units, performance awards, and forward equity shares excluded from the computation (in shares)	500		341		316	431
Performance Stock Awards
Denominator:
Dilutive performance stock awards (in shares)	0		34		90	0
Forward Equity Agreements
Denominator:
Dilutive performance stock awards (in shares)	0		0		14	0

COMMITMENTS AND CONTINGENCIES (Details) $ in Millions	Jun. 30, 2023 USD ($)
Certain capital improvements at triple-net leased facilities
Other Commitments [Line Items]
Funding commitment	$ 14.2
Portion of funding commitment subject to rent increase at time of funding	$ 2.7
Ensign and Pennant
Other Commitments [Line Items]
Aggregate required financing of capital expenditures as percentage of initial investment in property (as percent)	20.00%

CONCENTRATION OF RISK (Details)	3 Months Ended		6 Months Ended
CONCENTRATION OF RISK (Details)	Jun. 30, 2023 facility unit_bed	Jun. 30, 2022 unit_bed facility	Jun. 30, 2023 facility unit_bed	Jun. 30, 2022 unit_bed facility
CA \| SNF
Concentration Risk [Line Items]
Number of Facilities \| facility	29	27	29	27
Number of Beds/Units \| unit_bed	3,307	3,048	3,307	3,048
CA \| Campus
Concentration Risk [Line Items]
Number of Facilities \| facility	9	8	9	8
Number of Beds/Units \| unit_bed	1,527	1,359	1,527	1,359
CA \| ALF/ILF
Concentration Risk [Line Items]
Number of Facilities \| facility	5	5	5	5
Number of Beds/Units \| unit_bed	437	449	437	449
CA \| Rental revenue \| Geographic concentration risk
Concentration Risk [Line Items]
Percentage of Total Revenue	28.00%	27.00%	28.00%	26.00%
TX \| SNF
Concentration Risk [Line Items]
Number of Facilities \| facility	40	38	40	38
Number of Beds/Units \| unit_bed	5,126	4,849	5,126	4,849
TX \| Campus
Concentration Risk [Line Items]
Number of Facilities \| facility	3	3	3	3
Number of Beds/Units \| unit_bed	536	536	536	536
TX \| ALF/ILF
Concentration Risk [Line Items]
Number of Facilities \| facility	2	3	2	3
Number of Beds/Units \| unit_bed	212	242	212	242
TX \| Rental revenue \| Geographic concentration risk
Concentration Risk [Line Items]
Percentage of Total Revenue	23.00%	22.00%	23.00%	22.00%
Ensign \| SNF
Concentration Risk [Line Items]
Number of Facilities \| facility	83	83	83	83
Number of Beds/Units \| unit_bed	8,741	8,756	8,741	8,756
Ensign \| Campus
Concentration Risk [Line Items]
Number of Facilities \| facility	8	8	8	8
Number of Beds/Units \| unit_bed	997	997	997	997
Ensign \| ALF/ILF
Concentration Risk [Line Items]
Number of Facilities \| facility	7	7	7	7
Number of Beds/Units \| unit_bed	661	678	661	678
Ensign \| Rental revenue \| Customer concentration risk
Concentration Risk [Line Items]
Percentage of Total Revenue	36.00%	35.00%	36.00%	35.00%
Priority Management Group \| SNF
Concentration Risk [Line Items]
Number of Facilities \| facility	13	13	13	13
Number of Beds/Units \| unit_bed	1,742	1,742	1,742	1,742
Priority Management Group \| Campus
Concentration Risk [Line Items]
Number of Facilities \| facility	2	2	2	2
Number of Beds/Units \| unit_bed	402	402	402	402
Priority Management Group \| ALF/ILF
Concentration Risk [Line Items]
Number of Facilities \| facility	0	0	0	0
Number of Beds/Units \| unit_bed	0	0	0	0
Priority Management Group \| Rental revenue \| Customer concentration risk
Concentration Risk [Line Items]
Percentage of Total Revenue	16.00%	16.00%	16.00%	16.00%

SUBSEQUENT EVENTS (Details) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended	6 Months Ended
	Jul. 17, 2023 USD ($) facility extension_option	Jul. 31, 2023 $ / shares shares	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2023 USD ($) $ / shares shares
Subsequent Event [Line Items]
Principal amount \| $			$ 175,143	$ 175,143
ATM Program
Subsequent Event [Line Items]
Number of shares (in shares) \| shares			6,736,089	6,736,089
Share price (in usd per share) \| $ / shares			$ 19.71	$ 19.71
Subsequent event \| ATM Program
Subsequent Event [Line Items]
Number of shares (in shares) \| shares		3,839,348
Share price (in usd per share) \| $ / shares		$ 19.94
Real Estate Secured Loan Receivable Member \| Subsequent event
Subsequent Event [Line Items]
Principal amount \| $	$ 15,700
Loan bears interest on monthly payments	9.00%
Financing receivable, number of option to extend \| extension_option	1
Financing receivable, renewal term	5 years
Real Estate Secured Loan Receivable Member \| Subsequent event \| Skilled nursing facility
Subsequent Event [Line Items]
Number of Facilities \| facility	2
Real Estate Secured Loan Receivable Member \| Subsequent event \| Maximum
Subsequent Event [Line Items]
Early termination fee	3.00%
Real Estate Secured Loan Receivable Member \| Subsequent event \| Minimum
Subsequent Event [Line Items]
Early termination fee	2.00%